Return to fundamentals key to navigating 2020
Although 2019 was a great year for equities, that momentum might not carry into 2020 so stock selection will be important, according to T. Rowe Price.
Hari Balkrishna, associate portfolio manager for the T. Rowe Price Global Equity fund, backed active management’s potential to be independent from macro forces.
“I feel quite constructive on equities for 2020, I’m not expecting another year of 30% returns, but what is good about this year looking ahead is some of those big tail risks are behind us,” Balkrishna said.
“When we think about what we can looking forward to in 2020, it is back to fundamentals, corporate earnings growth and stock picking.
“Versus other equity classes, equities are still reasonable here, but I view 2020 and beyond as being fundamental rather than last year which was more macro driven.”
Balkrishna noted Evotec as an example of an equity that would likely grow despite any macro issues in the market.
“It’s got a roughly US$4 billion market cap and is one of Europe’s contract research organisations, but they co-own a lot of the pipeline they work on,” Balkrishna said.
“Evotec has a stake in something like 100 pipeline projects, even if one or two of those projects would pay off that would be that would be worth almost the market cap of what it is today.”
According to FE Analytics the early starters for the year were Wenlock Global (11.55%), L&G Artificial Intelligence ETF (10.15%), CFS Baillie Gifford Global Growth (8.9%), Hyperion Global Growth Companies (8.78%) and CC Marsico Global B (8.5%), month to 31 January, 2020.
The T. Rowe Price Global Equity fund returned 7.34%, while the sector returned 3.3%.
Performance of the ACS Global Equities sector month to 31 January, 2020
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