Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 285

Summer Series Guest, 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 within 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 focus on risk as a key element in assessing market or security selection. This view has guided the choices of my six favourite articles from the Cuffelinks archives.

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.

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.

Wilbur Li's view of the rewards inherent in a long-term investing approach was interesting, as well as a piece by Chris Cuffe called Just when my portfolio was set for the long term. It exhibits 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 explains the Five ways Australian super is a global outlier. Graham Hand shows 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 called Are you in fixed interest for the duration? 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, CFA, Guest Editor

Pilar Gomez-Bravo is Director of Fixed Income - Europe at MFS Investment Management.

MFS
banner

Most viewed in recent weeks

Are you caught in the ‘retirement trap’?

Our retirement savings system is supposed to encourage financial independence but there is a ‘Retirement Trap’ due to the reduction of age pension entitlements as assets and income rise.

The power of letting winners run

Handling extreme winners is a complex task. Conventional wisdom such as “you never go broke taking a profit” often leaves a lot of money on the table as strong growth stocks continue to run.

Tony Togher on why cash isn’t just cash

An active manager of cash and fixed interest funds can achieve higher returns than the cash rate through a selection of other securities while managing both liquidity and income for clients.

NAB hybrid: one says buy, one says sell, you decide

Differences of opinion make a market, and hybrid specialists disagree on the likelihood that NAB will call one of its hybrids early. It makes a major difference to the expected return on NABHA.

Watch your SMSF’s annual return this year

The best way to preserve your SMSF’s favoured status is to make sure the fund’s annual return reaches the ATO on time. There are new rules this year that every SMSF trustee should know.

Worshipping at the altar of alternative assets

Investors worried about an overvalued sharemarket and low interest rates on term deposits and bonds are focusing on alternatives. What are they and how are they used by leading asset allocators?

Latest Updates

Interviews

Kunal Kapoor on different paths to investor success

The Morningstar CEO on democratising investing, why saving in your youth is crucial, and why most investors care more about paying off their debts than comparing their results against benchmarks.

Economy

What is the likely effect of COVID-19 on the Australian economy?

Our close links to China mean the impact of the virus could tip the local economy into recession and certain sectors such as resources, education and travel will be harder hit than others.

Investment strategies

Do sin stocks really give your portfolio the edge?

Should sin stocks, those companies who engage in activities that are considered unethical or immoral, be excluded from a portfolio, or would this compromise potential performance?

Insurance

Poor pricing of life insurance products and the impact on Australians

The use of discounted pricing by insurers to attract new business is unsustainable and leaves existing policyholders on higher premiums for what is essentially the same product.

Retirement

Spotting signs of trouble in a retirement portfolio

Do you risk paying a lot of tax in accumulation phase? Or, if you're in retirement phase, do you face the risk of outliving your asset pool? Two key things to consider in the low-rate world of today.

Sponsors

Alliances