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Summer Series with Guest Editor, Pilar Gomez-Bravo
"We certainly live in a complex and challenging investing world, especially 10 years on from the global financial crisis. We believe that given these challenges, particularly in fixed income, it is important to have a diversified approach that allows for opportunities to enhance risk-adjusted returns.
While certain financial markets have become dislocated, it’s a time to be prudent and concentrate on the best opportunities. In current markets, it is important to turn our attention back to risk as a key element to assessing market or security selection. This view has guided the choices of my six favourite articles from the Cuffelinks archives.
I really appreciated a few articles that focused on investment patience, since we employ a long-term investment approach at MFS. All our teams focus on sustainability and not short-term advantages.
My career in investment management has been a continuous learning experience, but I’m sure that I could have benefited from some sage words before taking the plunge. That’s why I really enjoyed the article: What two investing insights would you give your 20-year-old self? Such a diverse group of 37 industry experts providing a wide range of pertinent advice. I tell my four kids that my job is to make more money for the people who trust me to invest on their behalf, to ensure they keep that money and grow it.
Wilbur Li’s view of the rewards inherent in a long-term investing approach was interesting, as well as a piece by Chris Cuffe that exhibited the balance between buy-and-hold investing and being responsive to short-term trends.
It’s important to have a global perspective and be mindful of your bond allocation in this world of increasing volatility and complexity. At this point in the cycle, the importance of a diverse asset allocation and owning assets that can provide some ballast to a portfolio in times of market stress is paramount. My next pick shows Five ways Australian super is a global outlier. Graham Hand explains how the compulsory superannuation system has hooked the earnings and savings of millions of Australians into the stock market. He correctly asserts that investment markets follow a herd mentality and it’s preferable to have an independent investment philosophy and process.
One of the things that comes up often in our discussions with clients is this fear of duration. Rates are generally rising, but we think that this generic statement underestimates the underlying complexity and opportunities of a global fixed income universe and the ability to deliver alpha and returns even though some countries are raising rates. David Scobie’s article gives an excellent account of duration and provides much-needed education on this often-misunderstood topic.
Finally, I refer you to an interview I did with Graham Hand on How to select assets in a world of choices. This takes a deeper dive into the role of active management and how to create a multi-asset portfolio, among other topics."
Pilar Gomez-Bravo is Director of Fixed Income – Europe at MFS Investment Management.
Check our archive of over 2,000 articles
Over summer, check our website for articles on almost any financial subject, using the search box in the top right of the website or on our new app. Or follow a favourite author or company.
This week, we have reviews of ETFs from BetaShares and LICs from Independent Investment Research to complete a year of strong growth for both. The White Paper from MFS Investment Management suggests a switch from seeking returns to managing risk is required in 2019.
Next week, in the final edition for the year, we will publish a special free ebook, Firstlinks, featuring 10 of the best original articles first published in Cuffelinks in 2018.
For a PDF version of this week’s newsletter articles, click here.