Asset manager Investors Mutual Ltd has outlined how its portfolios will be affected by the coronavirus, highlighting stocks such as Crown Resorts and Event Cinemas and admitting it will be a negative month for its funds.
US markets saw a correction this week with major indices falling more than 4% and smaller losses in Australian and Asian stockmarkets.
IML run seven equity funds, the largest of which was the IML Australian Share fund which was $2.8 billion in size, and said all funds would be affected by the correction.
Anton Tagliaferro, investment director at IML, said: “Clearly this will be a negative month for investors with losses recorded in every sector. IML’s portfolios will also be negatively impacted by the current correction as all stocks get sold off heavily.
“While our portfolios own companies like Sky City, Crown Casinos and Events Entertainment which will all be directly impacted by the drop-in tourism numbers, all these companies have proven business models and healthy balance sheets to help them ride out the current storm.
“Our portfolios are tilted towards companies which we believe are relatively immune to the consequences of the impact of the virus on economic activity – here we are talking about companies like Telstra, Coles, Ausnet and Sonic. Many of these stocks also offer attractive sustainable dividends.”
He said the portfolios were also holding a weighting to cash to avoid needing to ‘panic sell’ any assets and to give IML the option to buy good quality stocks if they were over-sold.
“When the sharemarket does recover, good quality companies with real businesses and sustainable earnings and dividends will again be well sought by investors and should recover well.”
Performance of IML Australian Share fund v S&P ASX 300 over the year to 31 January, 2020
