12 MARKET VIEW
Stability through the storm
The Nordea 1 – Global Stable Equity Fund has successfully navigated through many market turbulences. 1 The key to its success: investing in quality companies able to generate steady earnings.
The decade following the global financial crisis proved to be one of the most fruitful periods in history for equity markets , as un- precedented monetary stimulus and ultra-low interest rates powered stock prices – particularly growth-related names. However, this largely se- rene investment environment has since given way to elevated economic uncertainty and increasing market volatility. As 2022 comes to a close, the primary challenge facing investors continues to be historically high inflationary pressures, which are forcing many central banks to aggressively hike interest rates – potentially creating the storm of a global recession. Taking a fundamental perspective As heightened fear and pessimism in the mar- ket persists, equity investors are understandably uncertain of where to turn. “Investors need to meet fundamental challenges with fundamental investing,” Claus Vorm and Robert Næss, portfolio managers of the Nordea 1 – Global Stable Equity Fund , explain. Vorm and Næss are members of Nordea Asset Management’s (NAM) renowned
USD 150bn Multi Assets Team, which is headed up by Asbjørn Trolle Hansen. Vorm continues: “If we look at markets through a fundamental lens, equi- ties remain the asset class most likely to deliver a robust return able to offset inflation. However, risks in the market have clearly risen, so it is vital to be selective of the stocks you invest in.” Vorm and Næss, who have been managing NAM’s Global Stable Equity strategy for more than 17 years, do not expect all companies to be able to considerably grow in the face of the numerous pressures evident today – namely elevated infla- tion, rising interest rates and broader economic weakness. This is why the duo targets companies with steady earnings, free cash flows, EBITDAs, dividends, etc. and robust balance sheets, which can act as a stabiliser and provide elements of protection against economic downturns and rising rates. Stability has not been the most in-demand equity quality over the past decade or more, as investors gravitated towards stocks exhibiting outsized growth
1 The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. The value of your investment can go up and down, and you could lose some or all of your invested money.
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