In recent weeks, investing has certainly felt challenging. There’s been nowhere to hide – nearly every stock has plummeted. At times like this, I like to look at what top UK portfolio managers are doing. This can provide an element of reassurance.
With that in mind, here’s a look at how three of them are handling the current market sell-off.
Let’s start with Nick Train, who co-manages a number of top-performing funds including the Lindsell Train Global Equity fund. He’s considered to be one of the UK’s top stock pickers.
Last month, Train said that he had been taking advantage of the coronavirus-related market volatility to add to a few beaten-up holdings, including Diageo and Burberry.
He wrote in the Global Equity fund’s January factsheet: “We did so not because we have any insight into the severity and duration of the epidemic. Instead, because we have been rewarded more often than not during previous unsettling episodes by treating them as buying opportunities.”
More recently, in the February factsheet, Train wrote: “We have no notion of how pernicious the coronavirus effect will be but we do know it will last only a relatively short time in the context of the time horizon we work with when making investments.”
So clearly Train is thinking long-term and looking at the current volatility as a short-term setback.
Next, let’s look at Terry Smith (aka ‘Britain’s Warren Buffett’). He manages the legendary Fundsmith Equity fund. This has been one of the best performing global equity funds in the UK for years now.
At the recent Fundsmith annual general meeting, Smith said he was “pretty relaxed” about the impact of Covid-19 on his fund (although this was a few weeks ago).
He said that his fund should prove resilient in a stock market crash. This is due to the ‘defensive’ characteristics of the companies it holds. And when asked whether he was still buying shares in light of the market panic over the coronavirus outbreak, Smith answered “yes”.
However, he did say the coronavirus is likely to have a big impact on the economy. Why? “Because we’ve had quite a big shutdown in China which is somewhat the workshop of the world now.”
Finally, let’s take a look at the views of Mark Slater, who runs a number of top funds including the Slater Growth fund and the Slater Recovery fund. Both are among the best performers in the UK All Companies sector over the last five years.
In a recent note to investors, Slater said: “We strongly believe that now is the time to be in buying mode in our portfolios even though we will implement our buying sensibly – i.e. we will not look to do it all in one go.”
He also said that it pays to “look through the short-term ‘noise’ and hold on through periods of uncertainty.” But he added: “the tendency of investors to sell on bad news is nearly always detrimental to long term financial gain.”
So to sum up, it appears that top UK fund managers are sticking to their guns and looking to take advantage of the market volatility by adding to positions. I think private investors should take note.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
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Edward Sheldon owns shares in Diageo and has positions in Fundsmith Equity and the Lindsell Train Global Equity fund. The Motley Fool UK has recommended Burberry and Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.