Equities remain attractive despite volatility



Equities remain attractive as the effects of monetary and fiscal stimulus are expected to stay through 2022, signalling a tailwind for strong economic growth, according to Fidelity portfolio manager, Paul Taylor.
According to Taylor, some of the best-positioned equities to prosper were those which were set to benefit from the re-opening trade and which had healthy balance sheets, including those involved with e-commerce, food delivery, the cashless transition, leisure travel, leisure events and hospitals.
“People don’t often think of hospital operators as a reopening trade – they also were quite hit through COVID because a lot of your elective surgeries were cancelled or delayed,” Taylor said.
He said investors should question their equities which were linked to business travel as he expected a reduction in this space compared to pre-COVID due to the continuation of the working from home movement.
Market-based financials including private equity and credit markets as well as “special situations” like insurance markets were also in a good position for long term growth, Taylor said.
“Because you’ve had a range of different catastrophes or events that have tightened the market and tightened capital... and we’ve seen premiums go up across the board,” he said.
He believed interest rates would pick up slower, as the Federal Reserve, and by extension the rest of the world, would have learned from the mistakes made by their rapid response to bottoming interest rates in 2016.
Therefore, in the early phase, equity markets would benefit from a slower rates-rising environment as investors would see the economy doing well.
Recommended for you
Perpetual has appointed a new CEO for affiliate J O Hambro Capital Management, as it tries to stem outflows and refresh the brand.
Outflows of US$1.4 billion from its US equity funds have contributed to GQG Partners reporting its highest monthly outflows for 2025 in August.
Domestic equity managers are lagging the ASX 200 in the first half of the year, according to S&P, with almost three-quarters of Australian equity funds underperforming over the six-month period.
ETFs saw almost $5 billion of inflows during August, with international equities gaining double those of fixed income funds, as total assets close in on $300 billion.