Advisers warned of more market bumps to come

u-shape recovery Magellan jamieson coote bonds charlie jamieson Conrad Burge van eyk research Stephen van Eyk

25 June 2020
| By Mike |
expand image

Financial advisers and their clients should brace themselves for an elongated U-shaped recovery from recession and position themselves accordingly.

That is the consensus of a panel of portfolio managers and analysts put together by Money Management in Sydney and Melbourne with financial planners being advised to keep their clients patient, well-diversified and focused on the long game.

The panel was made up Magellan’s head of macro, Arvid Streimann, chief executive of Jamieson Coote Bonds, Charlie Jamieson, Fiducian’s head of investments, Conrad Burge and leading analyst and founder of van Eyk Research, Stephen van Eyk.

Asked how he would position allocations if he was still helping build approved product lists (APLs) van Eyk said he would probably be underweight shares, with some exposure to alternatives with some exposure to infrastructure funds.

What all the panellists agreed upon was that Australia and the world, in general, was in deep recession and highly reliant on the support of the central banks, with Jamieson stating that the markets had benefited from a liquidity-driven rebound after what had looked like a catastrophic situation in March.

“The problem is that the bazooka of stimulus has now been fired and as we look forward we’re going to see some of those disaster relief programs winding down,” he said noting that the problems had not actually gone away.

Jamieson said that, on this basis, there was likely more pain to come and that investors needed to understand that they had been through a “re-rally” driven by liquidity.

Magellan’s Streimann said that while there were a range of scenarios with respect to the shape of the market recovery, one of the concerns was that a V-shaped recovery was currently being priced into equity markets.

He said that, for its part, Magellan was more focused on either a U-shaped recovery or a prolonged and deep recession, with the outcome depending in large part on the policies applied by the central banks.

Fiducian’s Burge said the firm took a positive view of the market on the basis that investors in growth assets needed to be there for the longer-term, usually five years.

“We’re not looking at where markets are going to be in two months or three months,” he said. “We’re looking further afield.”

“We come through a difficult period and there are plenty of reasons to be negative about the outlook,” Burge said noting structural issues in the US, Australia and elsewhere. “There are lots of reasons to be negative but we think we’ve come through the worst of the virus and there is reason to be optimistic.”

Read more about:


Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry



Get rid of the rest of the old guard to clean up the culture, then you might have a chance....

2 days 16 hours ago
Ray Mitchell

The previous directors and managers of both Dixon Advisory and the ultimate holding company Evans and Partners should be...

3 days 4 hours ago
Old Fella

Why would any Licensee invest in educating and training new advisers, when as soon as the handcuffs come off, they will ...

3 days 8 hours ago

ASIC has obtained interim orders from the Federal Court to freeze the assets of a registered managed fund and prevent its former director from leaving Australia. ...

3 weeks 4 days ago

Insignia Financial has unveiled a new operating model and executive team, including a new head of advice, while three senior executives are set to depart the licensee....

3 days 18 hours ago

The $280 billion Australian Retirement Trust is the first superannuation fund off the block to report its performance for the 2023-24 financial year....

1 week 6 days ago