About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Monday, May 29th, 10:20AM
rss
Latest Headlines

Timing key for contrarian investing

Buying investments as others are bailing out requires courage but should pay off in the long run, says Julian Morrison, of fund manager Allan Gray.

Thursday, March 16th 2017, 6:00AM

by Susan Edmunds

He is in New Zealand as part of the Meet the Managers roadshows.

Allan Gray has recently started working with advisers in this country. It has an Australia Equity Fund, Australia Balanced Fund and Australia Stable Fund.

Morrison said the Australasian equities market was expensive overall but was made up of some equities that were “very, very expensive” and some that were undervalued.

He said investors had to be increasingly selective to find value, but there were still a number of opportunities available.

A fund manager with a contrarian strategy could time its purchases when stocks were selling for a low price, he said. That could enable investors to overcome the psychological barriers that usually resulted in individuals achieving lower returns over time than the market delivered as a whole.

Morrison said it was a matter of picking stocks that were selling below fair value, based on business fundamentals.

But investing with a fund manager that was determined to buy cheaply took some fortitude, he said.

The best prices would often come with bad news, and would mean turning away from the most popular options as other investors flocked to them.

They might look at companies whose share prices had under-performed meaningfully for a length of time, or who were being deserted by others in the industry. 

While the principles of buying cheaply and going against the market  were not difficult to understand, he said, they did not always feel comfortable for investors who were more used to being drawn to companies with rising stock prices or record profits.

“If a stock is priced for a great future and it turns out to be great then your investment doesn't go anywhere. If it only turns out to be good, it goes down. That’s what people miss.

“Buying cheaply is a sound basis for compounding returns over time but doing so is difficult for psychological reasons. It’s very hard to implement that contrarian approach in real time. It doesn't feel natural to do it.”

He said it was also often hard for fund managers to stick the course, because of the pressure to deliver returns on par with others in the market.

Morrison said the reception he had had from New Zealand advisers so far had been positive.

Tags: investment

« Labour: Support for regulation changeCode Committee voices objections »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • InvestNow mix-up disappointing: Stubbs
    “Bobby is right. Simplicity is a reporting entity for AML/CFT. They can rely on a third party for CDD/EDD etc, but they need...”
    21 minutes ago by Barry Read
  • InvestNow mix-up disappointing: Stubbs
    “No Murray. Simplicity need to know where the money is coming from. The rules don't say they can just make an assumption....”
    1 day ago by Bobby
  • Insurers want tweaks to client-first duty
    “Curious to see Partners Life seeking a tightening of replacement rules after seeding its business with business rolled from...”
    3 days ago by paulgogol
  • InvestNow mix-up disappointing: Stubbs
    “I heard Simplicity's recent wealth innovation tour and excited about it. What are the timeline to reduce the minimum investment...”
    3 days ago by ramanan3012
  • InvestNow mix-up disappointing: Stubbs
    “@bobby I think you have got the wrong end of the stick. The issue isn't AML as you think and suggest. Rather more likely...”
    3 days ago by Murray Weatherston
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.99 5.35 5.59
ANZ Special - 4.49 4.85 -
ASB Bank 5.80 4.85 5.14 5.49
ASB Bank Special - 4.45 4.74 5.09
BankDirect 5.80 4.85 5.14 5.49
BankDirect Special - 4.45 4.74 5.09
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.59 4.79 5.09
BNZ - Std, FlyBuys 5.90 4.99 5.19 5.49
BNZ - TotalMoney 5.90 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 5.95 5.10 5.25 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 5.00 5.20 -
Housing NZ Corp 5.79 ▼4.85 5.14 5.49
HSBC Premier 5.79 4.09 4.29 4.89
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.70 4.59 4.69 5.09
Kiwibank 5.70 5.09 5.19 5.65
Kiwibank - Capped - - - -
Kiwibank - Offset 5.70 - - -
Kiwibank Special - 4.69 4.79 5.25
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.00 4.86 4.75 5.30
Lender Flt 1yr 2yr 3yr
SBS Bank 5.79 4.99 ▲5.29 ▲5.59
SBS Bank Special - 4.59 ▲4.85 5.25
Sovereign 5.90 4.85 5.14 5.49
Sovereign Special - 4.45 4.74 5.09
The Co-operative Bank - Owner Occ 5.75 4.59 4.85 5.25
The Co-operative Bank - Standard 5.75 5.09 5.35 5.75
TSB Bank 5.65 4.80 5.15 5.45
TSB Special - 4.55 4.75 5.15
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.84 4.99 5.29 5.59
Westpac - Capped rates - 5.15 5.25 -
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.84 - - -
Westpac Special - 4.59 4.85 5.09
Median 5.80 4.85 5.14 5.38

Last updated: 29 May 2017 10:18am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com