Expect sideways market as bull run comes to an end
While markets are currently bullish thanks to several successful COVID-19 vaccine trials, it is likely to move sideways in the next few years and end a decade-long bull run.
Markets had been on a bull run since March 2009 with the Dow Jones reaching a record high of 30,000 points last week. This was particularly driven by market leaders such as the FAANG stocks, Tesla and Berkshire Hathaway which were all among the 10 largest US companies.
In a webcast, Avenir chief investment officer, Adrian Warner, said: “We are seeing a robust, resilient market over the next six to 12 months but we are getting to the level of concentration that we could see markets go sideways.
“We haven’t seen that in 10 years as we have had a long bull run but it normally happens in market environments like now where the few firms driving markets reach their limits of what they can do and start to struggle.
“It is important to think of the opportunities outside of the major stocks, there are great opportunities outside of the index majors. We are bullish in the near term but in the next three to five years, the market may struggle and move sideways as market leadership shifts.”
He said the Avenir Global fund was running a barbell strategy within the portfolio, which favoured growth and recovery plays as well as a small amount of special situations.
According to FE Analytics, within the Australian Core Strategies universe, the Avenir Global fund had lost 5.2% over one year to 30 October, 2020, versus returns by the global equity sector of 2.2%.
AUTHOR
Laura Dew
Recommended for you
There is one specific risk that is a significantly higher concern for financial services directors compared to companies overall and is impacting their risk appetite, according to the AICD.
Global fund managers are shunning bonds, with the asset class seeing the largest drop in allocations in more than 20 years.
Australian Ethical has seen its funds under management reach $10 billion, driven by organic customer growth and superannuation contributions.
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.
