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  • Writer's pictureCOMPASS

Depth of knowledge

Recently I have had the opportunity to watch a couple of live webinars put on by some of the key fund managers we use (in this case Magellan and Fidelity). What struck me this time was the level of research they go into, in areas that our clients may not necessarily consider par for the course for a fund manager.

Examples include;

  • Having consultants on board such as Mike Morell, former deputy of the CIA to provide insights into issues such as US/China relations, the threat of war over Taiwan, Russian hackers, etc

  • Bernard Salt presenting on demographic changes in the Australian population and how that will impact various sectors of our market

  • Researchers on the ground in Asia providing in depth knowledge on the mega trends that will dictate the future of an area which is so important for our future

  • International experts providing research into ESG and how fund managers can work with (or in some cases agitate against) the largest producers of carbon emissions, so we have a cleaner environment in the next 10 to 20 years

I thought it important to bring this to your attention, as while I might take this for granted, given I live and breathe it, for “normal” people (i.e. our clients) this depth of research is probably a bit of an eye opener. It is certainly reassuring that our quality fund managers do so much more than merely interview the CEO’s of the companies they invest in.

Now this doesn’t mean they will always get it right, as an example, Magellan acknowledged that they probably took too conservative a stance towards the back half of 2020 and this meant they missed out on the good post November run in markets. However as they said (and I agree), it is very easy to make perfect judgement in hindsight.

What Magellan consider most important when deciding where to allocate their clients money (your money) is not what will do well in the next six months, but what will preserve capital and do well over a period of 5 to 10 years. On this basis it’s hard to be disappointed when they underperform in the current booming market, given they have outperformed the index by a margin of more than 4% per annum since their inception in 2007.

As usual, happy to take any questions or feedback.


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