With markets experiencing renewed volatility, Aberdeen fund managers outline the key risks and where they’re spotting value. From deeply discounted UK stocks and reliable dividend plays to global opportunities and long-term structural themes, they explain how selective investing could yield rewards in the current climate.
Ben Ritchie, co-manager of Dunedin Income Growth Investment Trust:
“UK equities were historically cheap even before the sharp further drop of the last few days. The steep decline has only made them look even more attractive. There are plenty of stocks on close to double digit dividend yields that we think are incredibly well underpinned, alongside a large number of companies trading on multiples that are lower than at the nadir of Covid-19 when we were unsure if the world could function.”
Martin Connaghan, co-manager of Murray International Trust PLC:
“The human element to market volatility always results in sentiment swinging wildly from one extreme to the other based on emotion. The reality is often somewhere in the middle. Are there some very good companies in China? Yes. Are some of the Magnificent 7 still very good businesses? Yes. Do either of the prior two statements change if said markets or stocks go up or down 10%? Probably not. We will certainly be looking to take advantage of what has happened during the last week. Does that automatically mean the US weight in the portfolio will be going up? No, not necessarily.
We will be looking at stocks within the US alongside all the other markets. We will be looking at all the existing holdings in the portfolio in addition to those on our watchlist to see if they now make sense in terms of further or new capital being allocated to them.”
Jamie Mills O’Brien, co-manager of the abrdn Global Innovation Equity Fund:
“As we were highlighting in the second half of last year, we view the risk reward for the Magnificent 7, and US equities, as much less compelling than was before. This is because of more limited earnings outperformance from the big technology names, but also because an acceleration in growth through 2025 for the US market seems increasingly unlikely as economic conditions deteriorate. We expect further earnings growth downgrades for the S&P through this year.
We remain underweight to the US market, and while we will selectively take advantage of opportunities to buy into high quality businesses at a discount following this sharp reversal in US equities YTD, we are also positioning the portfolio to take advantage of the broadening out in performance – across sector, geography and theme – that we expect to continue. We see opportunities in emerging markets, particularly China, as well as in high quality but mispriced small and mid-sized companies, both within the US and in other parts of the world. We have been adding to high quality opportunities in all these markets. We also view themes such as the reorientation of supply chains, autonomous vehicles, and geopolitical tensions, as increasingly driving equity market performance and are looking to take advantage of these trends.”
