In the shift from domestic shares to global equities in self-directed and SMSF portfolios, both advisers and investors are asking specifically about valuations.
“There’s been a bit of concern with valuation because investors want to diversify, but they also want downside protection,” Antipodes Partners managing director Andrew Findlay told selfmanagedsuper.
Pinnacle Investment Management director Matt Dell added: “They want global equities exposure, but they want some comfort where if markets are choppy, they get a sustained correction and therefore this is going to be a good place for them to invest in.”
Dell told selfmanagedsuper he believes this message is getting out there.
During a media briefing in Sydney today, Antipodes Partners chief investment officer and founder Jacob Mitchell highlighted the importance of not overpaying for structural growth.
Mitchell said many investors were overpaying for perceived structural winners.
“One of the biases we’re aware of and is highly prevalent is structural growth – because interest rates are so low, it’s very easy for disruptors to get funding and the equity market’s paying them to disrupt,” he noted.
“Combine that with technological change, on one level you could argue it’s completely rational, but at another level I’d argue there’s risk building because there’s a point where certain activity starts to become attractive [and] you’ll ultimately end up with more competition than you thought.
“An example of this can be seen in cloud computing. There’s going to be a point in time where every corporate is in the cloud and then cloud computing is no longer a structural growth story, it’s a cyclical story, so be careful about paying too much for structural growth.”
He warned investors needed to be aware of such expensive biases.
“When markets become irrational around longer-term impacts of macro change, there’s an opportunity to buy a business at the right price, which is what Antipodes seeks to do,” he said.
“Hopefully that means we avoid the value traps and it also means we get our fair share of disruptors but at the right price, and we implement our philosophy not only long, but also short.”
Antipodes holds $7.5 billion in funds under management and is supported by multi-affiliate investment firm Pinnacle Investment Management.
