Industry Voice: What makes for an all-weather strategy?

Steven Smith discusses the attributes that help to position a strategy for a variety of market environments

Gareth Jones
clock • 1 min read
Industry Voice: What makes for an all-weather strategy?

The Capital Group New Perspective strategy has a focus on investing in multinationals and seeks to capture changes in global trade.

However, the portfolio's composition reflects what emerges from global, fundamental research. Digital transformation and disruption, for example, has been a strong theme but is derived from analysing the activities of individual companies.

Investment director Steven Smith points out that the strategy is structurally flexible and has a deliberately broad opportunity set. For example, the strategy's top 20 positions include a bank, an insurance company and traditional pharmaceutical companies, as well as a heating, ventilation and air conditioning company.

The result is a portfolio that is well placed to weather a range of different environments over the medium to long term.

Smith is clear that the strategy is not growth or value, as it has performed well in both environments. He argues that over the longer term, "capital generally flows to the highest conviction investments, regardless of geography, sector, type of company or investment style".

Smith also emphasises that the strategy looks beyond short-term volatility. Portfolio managers won't be distracted by, for example, a spike in inflation or a single quarter's GDP figures.

"The ability to look beyond short-term noise and short-term volatility is one of the most important ingredients to outperforming over the long term," he says.

Data as at 31 December 2021. Source: Capital Group

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