InvestNow News 30th Aug – Antipodes – Investing in an age of uncertainty

At Antipodes, we believe the biggest risk to your clients’ portfolios is overexposure to expensive growth.

When considering this risk, most will immediately think about exposure to growth-style funds, but overexposure can materialise in ways you may not fully appreciate.

Consider the passive index. Given software and internet alone have grown to account for 10% of the index, this represents an area of risk.

The last time this was the case was the tech bubble. As global growth slows, we caution against paying any price for growth and quality. Instead we need to look for structural growth opportunities in less obvious parts of the market.

Another major area of risk that must not be overlooked is overexposure to the US economy.

At the beginning of July, the US economic expansion became the longest since the Civil War and the longest bull market on record. It’s been a bull market characterised by quantitative easing, buybacks, disruption, credit growth and record low interest rates. Certainly, in recent times, the US economy has been the last bastion of growth in a world where growth has become scarce.

Can the US accelerate from here?

US Industrial data is showing signs of weakness and the US is already running a fiscal deficit of more than 4% of GDP. With the potential for much greater fiscal flexibility elsewhere in the world we think the US economy will be relatively weaker than the other major economic blocs.