Insights
Access Active
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Global Equity Observer
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September 27, 2022
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September 27, 2022
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Access Active |
Falling markets, rising rates and inflation, pestilence, war, deglobalisation, drought, the energy crisis, acerbic politics and a less sanguine regulatory environment have our team glad of the benefits of our bottom-up stock picking approach.
It affords cool heads and a clear focus where temperatures seem to be otherwise rising. The end of the summer in the Northern Hemisphere also heralds those “back to business” September winds; it therefore seems a good time to revisit our interpretation and the attractions of truly active investing.
What Active Management Means to Us
High quality is by its nature less exposed to potential adverse events. We cannot influence or even predict the macroeconomic or political or regulatory environment, but we can aim to ensure that the stocks we hold are the most robust we can find – and that the companies we select are under managements that are more likely anticipating, mitigating and managing resiliently through adversity. Active portfolio managers that own stocks for the long term rather than just rent them are used to filtering out short-term noise and data for relevant and material drivers of long-term return.
Meanwhile, regulators are getting active too, which will bring new challenges for companies. As governments around the world consider the impact of the changes of the last decade ‒ technological, social and environmental ‒ the threat of regulation has grown. Beyond this, we believe that markets have yet to fully reflect the phalanx of issues that will make the going tougher for companies from here on, and the fact that, longer term, all companies are likely to face greater structural cost pressures that may well pressure their earnings. As such, and as we have been signalling for some time, earnings resilience and pricing power are likely to become ever more significant assets. With our portfolios’ primary skew to quality defensive sectors, it gives us some comfort going forward that the portfolios’ earnings are likely to hold up better than the market as a whole, and that investors who choose active will be vindicated.
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Managing Director
International Equity Team
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COO and Head of Client Experience, International Equity
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