Active investing has always been a pivotal strategy, with its focus on maximizing returns and minimizing risks. The recent episode of Merryn Talks Money, featuring an insightful interview with Gervais Williams, head of equities at Premier Miton Investors, sheds light on the benefits. In this article, we explore the key takeaways, emphasizing the advantages of active investing in a dynamic market.
The Shift in Global Trends
Williams’ analysis starts with the ‘Retreat of Globalization,’ a theme from his 2016 book. He observes that recent events, such as the COVID-19 pandemic and political upheavals, have accelerated this retreat. This shift has profound implications for supply chains and corporate strategies, emphasizing the need for agility – a trait often found in actively managed portfolios.
Active Management in Times of Uncertainty
Active fund management is more than just chasing high returns; it’s about managing risks effectively. Williams discusses how recent market shifts, including the pandemic and geopolitical tensions, have altered the landscape. Active managers can adapt portfolios to these changes more swiftly than passive strategies, allowing investors to navigate through turbulent times with greater resilience.
The Case for Listed Companies
Williams offers an interesting perspective on the advantages of being a publicly listed company in the current economic climate. With the cost of borrowing set to rise, publicly listed companies have a distinct edge over privately financed ones. This factor makes active investment in these entities potentially more lucrative.
Equity Markets as a Lifeline
The conversation also highlighted how equity markets have functioned effectively during the pandemic, providing vital capital to companies in need. This responsiveness of the equity markets underscores the value of active investing in being able to capitalize on such opportunities.
The Resurgence of the UK Market
A significant part of the discussion was dedicated to the performance of the UK market. Williams predicts a strong showing for the UK stock market in the coming decades, based on current undervaluations and investor behaviors. For active investors, this presents an opportunity to tap into a market poised for growth.
The Role of Active Management in a Flat Market
Interestingly, Williams suggests that mainstream indices might experience a prolonged period of stagnation. In such an environment, the value of active management becomes more pronounced. By carefully selecting and managing investments, active fund managers can seek out growth opportunities even in a flat market.
Gervais Williams’ insights from the Merryn Talks Money episode provide compelling arguments for the advantages of active investing. In an ever-changing global market, the ability to swiftly adapt and manage risks effectively is crucial. Active investing offers a strategic edge, enabling investors to capitalize on emerging opportunities and navigate through uncertain times. As the investment landscape continues to evolve, embracing the principles of active investing could be key to achieving long-term financial success.