Mackenzie Minute: June 9, 2017
Hussein Sunderji, Portfolio Manager on the Mackenzie Ivy Team, discusses the broader issues that are on his radar and how the Ivy funds are faring in recent global markets.
HUSSEIN SUNDERJI: If we reflect on the last year, it’s been quite eventful. Overall, markets have done quite well, but there have been a few ups and downs along the way. If we go back to last June, we had the Brexit and so there was lots of volatility around this event. We were actually able to find some pretty good opportunities in Japan at that time and some other select cyclical industries globally and then in November, of course, we had the US Presidential Election and so heading into the election, we were, again, able to find some good opportunities in Japan and then coming out of the election, we were able to find some good opportunities in the Hong Kong market. Since the election, markets have performed extremely well, so a lot of those pockets of opportunities that we had seen have largely evaporated.
At Ivy, we try not to focus on specific macro events. Instead, we try to pick companies that can endure various different types of macro and market environments, but we are quite concerned about three broader issues. The first would be the state of global balance sheets, both government and consumer. The second would be the elevated market valuations that we see today despite the fact that global growth is actually quite weak and the third would be the market’s reliance on very accommodative monetary policy and then the potential long-term negative implications of these policies.
Our investment philosophy and the way that we manage the portfolios remain consistent. We try to find the highest quality companies we can and we seek to own them at reasonable valuations, but given the recent trajectory of most global markets and lofty valuations, the Ivy funds today, generally speaking, are operating with elevated cash levels, but we continue to be patient and seek out opportunities and try to take advantage of them when we see them so that we can deliver superior long-term returns for our clients.