- Thursday 09 January 2025
After a turbulent, but ultimately positive year for most investment markets, our approach to managing our client money remains consistent. We believe in diversified, risk(volatility) appropriate, goal-based investing using passive and/or data backed strategies.
Where possible, we try to minimise ‘activity’ in our client portfolios as this generally adds cost and can work against long term returns.
However, you employ (trust) us to use all the knowledge, resources and tools at our disposal to ensure your investments are in the best possible position for achieving market returns. Our focus in 2025 is to, where possible, protect the gains of 2024 and maximise the opportunity for returns in the coming months.
Our colleague Gary Browne , Portfolio Analyst at Curran Futures, offers the following perspective on markets right now.
'Market Perspective
With historically high valuations of some US Tech companies currently a concern for investors, and many industry experts projecting far lower expected returns from US stocks in the near future, it’s possible that a tilt away from US large cap growth will prove to be a sensible investment strategy for investors for the first time in many years.
The comparatively poor performance of both developed markets, ex-US, and Emerging Markets in recent years means that valuations here are now relatively attractive.
Whilst not a perfect predictor, starting PE ratios do give some indication of expected future returns, with lower starting PEs implying higher future returns and vice versa. That’s not to say that international stocks are a bargain, they could go lower, but international prices are far from expensive historically.
Dialing down (but not excluding) exposure to US tech stocks can easily be achieved from investment funds with a deliberate value bia. For example, a global value fund has a current Price/Earnings ratio of 15.34* while the PE ratio for the Nasdaq stands at 46.84 as of Jan 3 (Source Morningstar)
Fixed Income Assets, such as Bonds, also offer potential upside following a continuing lag on prices over 2024. Keeping a suitable Asset Allocation Level for investors is key here.
*A PE of 15 implies an earnings yield of 6.67%pa. In other words the expected return on this fund is approx. 6.67%pa'
