In the depths of the pandemic, Sebastian Mullins’ multi-asset team at Schroders in Sydney allocated 10 per cent of their assets, which today stands at around $4 billion, to global equity funds.
They once again added 10 per cent to equities and 10 per cent to credit. That was just before the sharemarket went on to rally more than 20 per cent,, despite higher interest rates and fears of a hard landing. Before joining Schroders, he worked for Japanese fund manager Nikko Asset Management where he helped build from scratch their multi-asset strategy in Singapore. He kicked off his finance career at Challenger in Sydney during the global financial crisis after a brief stint in music publishing.
While Mr Mullins says the multi-asset strategies often mean they miss out on the latter parts of a rally , the funds are “lower risk and more conservative” – perfect, he says, for today’s environment.“We have been doing this process since pre-2008 and our VCL frameworks gets us in and out at the right times,” the fund manager says.
“People spend aggressively. They use credit card debt, they use whatever they can to stand still. So, you can see lots and lots of spending, but eventually the consumer gets tapped out, that’s when it falls off a cliff.”While the market appears to have priced in a soft landing in America amid resilience in the economic data , Mr Mullins says the forward-looking indicators paint a bleaker picture.
“If the market comes to our view, then they’ll be a huge correction and if the market stays in the soft landing camp, a lot of that is already priced in.”
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