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One year on from the ‘fastest bear market in history’ we can see the benefits in keeping calm and staying invested in the Australian stock market.
This is amply demonstrated by Prime Value’s Australian equities funds, which have all performed strongly over the last year – none more than the Prime Value Emerging Opportunities Fund, which is now ranked top in its category by Morningstar with a 63% return for the year to 31 March 2021.
Prime Value Emerging Opportunities Fund portfolio manager, Richard Ivers, shares his views below on where the market is currently at. But first, let’s rewind 12 months:
During February and March 2020 markets plummeted. In the USA, the S&P 500 fell 30 per cent in just 22 trading days after reaching a record high on 19 February 2020 – the fastest drop of its magnitude ever.
Likewise the ASX 200 entered its fastest bear market, shedding 20.5% in just 14 days.
As economies globally shut down, the question seemed to be how far could markets fall?
What happened next surprised many investing experts, and emphasised the virtues of the words: DON’T PANIC.
The fastest bear market in history turned out to be the shortest bear market. One year on, the recovery has been remarkable.
Prime Value Asset Management’s Australian equities funds show the benefits in keeping a steady hand.
Looking through the market
As Prime Value fund managers Richard Ivers and ST Wong often say, their job is to “look through” short-term market fluctuations when making investment decisions.
When markets were spiralling one year ago, Richard and ST sought to turn crisis into opportunity.
The savage sell-off meant many good quality companies were suddenly available at better value, in line with Prime Value’s ‘Growth at a Reasonable Price’ approach.
For the Prime Value Emerging Opportunities Fund, the volatility among small cap stocks has provided many opportunities during the shutdowns and on through the recovery.
Investing during this uncertainty – always with an eye on ‘protecting the downside’ – allowed the Prime Value Emerging Opportunities Fund to be the best performing Australian small caps fund for the year to 30 June 2020, the second best performing Australian equities fund in any category for the calendar year to 31 December 2020 (Morningstar), and currently the best among funds who blend value and growth styles for the year to 31 March 2021 (Morningstar).
Current state of play
Richard Ivers, portfolio manager for the fund, says the market continues to create opportunities. “The small caps market is still choppy, there is more takeover activity, and there are some good buying opportunities at present.
“The volatility has created the opportunity to buy some quality companies relatively cheaply.”
He says looking through the COVID-19 market recovery continues to be key. “We see some big fluctuations in stocks which may be perceived as winners or losers from the recovery. By looking through the short-term issues and analysing the strength of the business we can find some real gems.
“But the economy is changing, and investors need to look through the market swings. A key current question is how will the COVID winners and losers from last year fare during 2021?
“Many people are trying to trade the re-opening, but it always has to come back to growth at a reasonable price.
“For example, some of the travel stocks are now over-priced. But there are other ways to benefit from economies re-opening which are less obvious, via really good businesses.”
10 June 2021
ST Wong, CIO features on Switzer TV to discuss 2 portfolio stocks in Prime Value Opportunities Fund Click here to watch ST Wong on Switzer TV
27 May 2021
Shooting the lights out (as an investor) is great, but even many small-cap investors need to strike more of a balance between risk and reward. As a family office structure, Prime Value’s Emerging Opportunities Fund keeps a keen eye on capital preservation and downside protection, while investing in a basket of ex-ASX 100 stocks. “We run […]
19 May 2021
Ivers steady on wild ride during first three years Richard Ivers, portfolio manager for the Prime Value Emerging Opportunities Fund, has notched up his first three years in charge of the small caps investment fund. Markets have thrown just about everything at investment managers during this time: from flat spots to record highs, and the […]