FLASH: Fund Manager Who Beat 98% of Peers Says Stay Calm and Buy Stocks
Trade war? Yes.
Global slowdown? Yes.
Volatile market? Yes.
The Big Q: Does that mean investors should cash out and run?
The Big A: Not this top-performing fund manager, she is staying put.
Joanna Kwok, who co-manages the JPMorgan Asia Growth Fund, says volatility will linger in Asia markets due to trade war uncertainty and corporate earnings concerns.
Even with the unpredictability of President Trump and other political risks, investors should hang on as valuations suggest “decent” returns in the next 12 months, she said.
“You just need to be continuously disciplined,” said Ms. Kwok, whose fund tracking the MSCI Asia excluding Japan Index has returned 11% YTD. “At this valuation, we should be buying not selling.” Ms. Kwok’s open-end fund has beaten 98% of peers so far this year and for the past 5 years, based on the data.
While fund managers and strategists agreed that volatility will remain, few have shown the conviction to buy even those stocks trading at attractive prices.
Ms. Kwok remains almost fully invested, with a net cash level of about 2%. As a long-term investor, she prefers regional growth stocks that are more domestically focused in financial, technology and consumption-related businesses.
Market declines recently have enabled her to buy back some technology and Indian financial equities, she said.
The MSCI Asia excluding Japan Index is trading at 1.3X its estimated 12-month price-to-book ratio, slightly below its 5-year average the data show.
Other comments from Ms. Kwok:
- Kwok trimmed some ASEAN consumer and China property management stocks
- Central bank accommodative measures would be more effective in buoying sentiment if coupled with fiscal policies; this is happening in India, China and Thailand
- While risk-off sentiment still dominates Asia markets, Ms. Kwok says flows are resuming from North America and Europe as valuations become attractive
- Specific industry trends, such as insurance expansion in China and India, will drive Asian growth over the long term