The quarterly newsletter from PSG Asset Management.
In this edition, we consider the importance of clear and considered decision-making in tough times. We reflect on the emotional biases ingrained in individual and professional investors alike – and how they can throw a solid strategy off course if left unchecked. We also set out our principles for tackling difficult decisions and explain outcomes from our investment process that may at first seem counterintuitive: why we are deploying cash into a global ‘bull market’, and our preference for Japan over China as a fertile hunting ground for strong long-term returns.
market conditions can make for difficult investment decisions
A prolonged period of poor performance from the
local market – which, in some cases, has affected short-term returns from fund
managers – has left many investors anxious and frustrated. While most of us
understand the importance of taking a long-term view, it’s usually more
difficult than we anticipate to put this into practice. ...
How do you know when to sell an underperforming stock (or
Investment decisions by fund managers and stock investors are similar
We believe that the principles behind when to buy or sell a stock and
when to buy or sell a fund are similar, requiring the same framework for making
good decisions that put the odds in the investor’s favour. In both instances,
the objective is rational decision-making. This requires carefully considering
the impact of emotions on our behaviour as investors. ...
Why we are deploying cash into a ‘bull market’
Our funds’ global equity exposures have increased, despite high overall market valuations
In early 2018, we raised the cash holdings in our global funds to record levels after we became increasingly cautious about the available opportunities at the time. We have since increased equity exposures significantly, allocating money to what we deem to be attractive opportunities. With several major stock markets around the world trading near record levels, clients may rightly ask why. ... Read more
China versus Japan: historic growth or future returns?
Strong historic growth
in GDP can be misleading for investors
We are often asked why we are not investing in China: our funds have little direct exposure to the Chinese economy but in contrast, substantial exposure to Japan. Many clients have read about China’s strong growth in GDP over the past 20 years. A natural assumption is that growth is likely to be sustained in future. This, in turn, is expected to lead to high returns for equity investors. We question both these assumptions. ... Read more
Portfolio Holdings as at 30 June 2019
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Performance to 30 June 2019
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Unit trust summary
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PSG Angles and Perspectives: Q2 2019 (pdf)
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Archive of previous editions
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