Read More
Simon Murphy
Fund Manager
Those words were uttered to us recently, in relation to the UK equity market, by one of our longer standing, highly experienced stockbroker contacts and it encapsulates current sentiment perfectly. We haven’t yet asked for the updated version post the latest UK political shenanigans, although we strongly suspect it would not be printable!
There is a lot of talk in investing circles about pessimism creating the best opportunities or, as Warren Buffett would say, ‘be greedy when others are fearful’. Whilst this is undoubtedly true with the marvellous benefit of hindsight, all too often, when the pessimism is in full flow, experienced fund managers and the general investing population alike, are too concerned with the litany of imminent wealth destroying dangers to actually act on, what we all know, is sage advice.
For sure, the list of dangers currently is impressive and includes high and sticky inflation, rapidly rising interest rates, a cost-of-living crisis, potential winter energy shortages, ongoing war in Ukraine, political instability in the UK, draconian covid restrictions in China, an imminent collapse in corporate profitability and a whole host more besides. We will not debate these dangers further in this piece, they are well known and widely discussed already - we are where we are after all. Instead, we offer a few graphics to remind readers just how far sentiment, and markets, have come already, before concluding with a reminder of our approach here and now.
A typical 60:40 portfolio (60% equities, 40% bonds) is currently on track for its worst performance in 120 years as highlighted in the chart below from Bank of America. No wonder investor nerves are frazzled.
One of our core beliefs in running the VT Tyndall Real Income Fund is to have the courage of our convictions to do what we believe is right for our client’s medium term financial wellbeing, without being constrained unduly by worries over near term volatility. Consequently, as uncomfortable as they can be, we really do look at periods such as these as an opportunity to invest client capital (and our own) in strong business franchises at incredibly attractive prices.
We gave up a long time ago trying to predict what would happen to markets and share prices on a very short term view and so, whilst mindful that there may well be further bouts of volatility and/or near-term weakness, we find the combination of significant market weakness already, near universal bearishness – particularly as it relates to the UK, compelling valuations and outstanding individual stock opportunities, simply too good to ignore. We are, unashamedly, being greedy today as others are demonstrably fearful. We look forward to our clients reaping the subsequent rewards over the next few years.
WARNING: All information about the VT Tyndall Unconstrained UK Income Fund (‘The Fund’) is available in The Fund’s prospectus and Key Investor Information Document which are available free
of charge (in English) from Valu-Trac Investment Management Limited (www.valu-trac.com). Any investment in the fund should be made on the basis of the terms governing the fund