Market & Portfolio Update - May 2020
Share markets across the world continued to recover solidly during May, looking ahead to a gradual loosening of restrictions, and have now recovered much of the March sell-off. The range of Booster’s core diversified funds have now delivered moderate gains over the past 12 months, a pleasing outcome given the volatility we have seen. While it would be premature to conclude that the world is out of the woods yet, the recent market recovery highlights the importance of sticking with a carefully chosen investment plan when markets are volatile.
However, the market recovery has not been even. The share market values of businesses that are more vulnerable to a period of disruption have still been most negatively affected. Our active investment choices in areas like healthcare firms, and a focus in our global shares on companies with solid cash income has helped support returns. Selectively supporting NZ companies looking to raise capital has also provided good opportunities at attractive prices. From here, we remain focused on staying adaptive, as worldwide policymakers tackle the balance between ongoing economic disruption, the pace of easing lockdown measures, and the length of economic support required to ultimately get the global economy moving again.
You’re sitting in your favourite restaurant, feeling famished. The waiter arrives and reads out a long list of mouth-watering specials. Yet the moment he walks away, you find you can recall only the last item on the list. Congratulations, you’ve been struck by the recency effect.
One of the most persistent debates in the investment industry is whether investors are better to use passive or active managed funds. With strong advocates on both sides of this debate, it may seem like an obscure discussion. However, for investors, long-term performance data tells a conspicuous story.