Schroders' Virginie Maisonneuve identifies key drivers for success for 2012
Head of Global and International Equities Virginie Maisonneuve, shares her Top 10 Tips for Global Equities success in 2012.
1. Volatility will continue to be driven by Europe and sovereign issues; the fear of China’s hard landing; and the impact of many elections in the world.
2. Maintain a balanced portfolio anchored around growing defensive holdings in staples and health care and quality cyclicals, especially in energy and materials. Do not get out of cyclical stocks all together.
3. Make sure you own enough US stocks. The US is recovering slowly but is ahead of Europe.
4. Be prepared to add to emerging markets as the year progresses. Monetary policy should loosen as inflation trends downs. Gain exposure either through stocks listed in emerging markets or via companies in developed markets with large exposures to emerging markets. Get the best stocks wherever they are listed and don’t contain yourself to one region.
5. Test your stock earnings growth assumptions rigorously. Be ruthless! Consider current stock prices compared to 2008 valuations and margins
6. Take advantage of extreme valuations: for example, equity risk premium in Europe is at an all-time high. When markets are very gloomy and discount the worse, the risk is on the upside.
7. Stick to fundamentals: when fear runs equity markets, the disconnect between prices and fundamentals can offer great opportunities
8. Watch currencies: They influence competitiveness. A weak Euro is good news.
9. Monitor the “EPF” i.e. the balance sheets of the ECB, PBOC and the Fed, as well as sovereign bond issues.
10. Be prepared to act on mini cycles: The situation in Europe will be uncertain for a while and equity markets will move on macro economic news.
Virginie Maisonneuve, Head of Global and International Equities, comments:
"We believe volatility will remain well into the first quarter of this year as the markets gauge the resilience of the European and global financial system, and how it will cope with potential additional shocks. There will be three main causes for the continuing volatility: first, the future of Europe; second, the US elections; and third, the nature and effect of the slowdown in Chinese growth. “We continue to pursue companies which, irrespective of the short-term market uncertainties, are benefiting from longer-term global trends and show strong global competitiveness. These include companies benefiting from the mitigation of climate change, growth in emerging market demand and demographic trends. These trends will continue to shape the global economy throughout 2012"
Schroder’s Global Equities business manages £10.7 billion (as at 30 September 2011) of funds on behalf of clients globally.
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These are the views of Virginie Maisonneuve and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.
Schroders is a global asset management company with £182.2bn (€211.6 billion, $283.9 billion) under management as at 30 September, 2011. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 32 offices in 25 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
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