CIARAN RYAN: Flexible funds are getting a lot of attention from investors because of their ability to invest across all asset classes and, as the name implies, their ability to respond to market conditions and opportunities by allocating funds quickly and flexibly. How have they performed relative to other investment funds, and is this something you should consider for your retirement nest egg?
But our view is that rates are likely to stay higher for longer, and our view is we’ll see rates being cut probably only into next year in the US if there’s a bit of a recession, which is pretty bad for markets. So we think a 10% to 15% correction in the global market is quite possible some time in the next three to six months.
And for the US [at the] beginning of the year we are probably not too far [off], and still feel that you’ll get a total return from where we started the year at around a total return of 5%. We’ve done about a 9%, 8% probably total return year to date. We’ve run our Flexible Fund basically just over 10 years, but we’ve run it about 85% invested in equities. That’s been the base case.
When we started out it was our first long only fund. Laurium Capital’s been going for coming up for 15 years mid this year – very nearly 15. We started out only managing hedge funds and our first foray into the long-only space was through our flexible fund. CIARAN RYAN: So you’re coming up for your 10th birthday of the Laurium Flexible Prescient Fund. How’s the score sheet? What is it looking like?
So, as I said, we have had 85% in equities over time. That’s where we’ve been. At the low point we’ve never been below 50%. That was very briefly, and in equities, our max has been 95%. We’ve been up to 20% sitting in offshore assets – bonds or equities offshore as well. So you do have this flexibility.
But with the bonds, in particular, we do think that if you just get your running yield of close to 11%, and yields don’t come down, you get a nice return. And if yields drop by, let’s say – sort of our view – 75 basis points from here, you get another 5% on top of that. So you’re getting sort of high double-digit returns from bonds. We think you’ll get that.