- Emotions have no place in investing
- Managers nowadays should include real active management
- Rate normalization in the US is actually good news
When it comes to building investment portfolios, managers must look for durable, risk focused portfolios that allow investors to navigate short term volatility in the markets.
According to John Hailer, President and Executive Director, Natixis Global Asset Management, it is imperative to "remove emotions from investing." In his opinion, creating a real goal profile for investors is more important than looking for quantitative returns, also, considering the current expectations and the fact that "volatility will linger for a while, traditional portfolios will not be enough to achieve the expected return." Instead, a combination of strategies including active management and liquid alternatives must be used.
Of course, when opting for an active strategy, according to David Lafferty, Chief Market Strategist, Natixis Global AM, such strategy should be "very active and not just half-ways", since if the only active feature is in the name, it will be very diffícult to exceed the net return. With regards to the Mexican market, where the operation of the firm according to Mauricio Giordano, CEO, Natixis Global AM Mexico, is a long term commitment, including, "a wide offer of solutions with a high level of specialization in each of its affiliate managers", Lafferty recalled that when the Mexican bonds offer an average 3.5% in return, Mexican investors are expecting returns of 10% in their portfolios, hence there is an important difference in the perception of the market.
However, he feels optimistic about the prospects for Mexico since its current circumstances are not linked to the situation in China, and the fact that the peso has lost more than other currencies vs. a strong dollar, means that "Mexico is better positioned than most emerging economies to offer returns denominated in dollars," which makes it an "attractive destination for the international capital."
With regards to the rate hike from the Federal Reserve, Lafferty explained this should not be of concern, as any process of normalization will happen gradually and it is an evidence that the economy is improving, which is positive for the market perspectives. While the volatility is here to stay, keeping a long term, well diversified profile will help navigate the current environment.