OpenMind sees sector play as safer in volatile markets
Markets reacting to uncertain politics are punishing stock pickers, so a safer strategy for investors may be a sector-based allocation, says Paris based OpenMind Asset Management.
Tristan Abet (pictured), CIO and co-founder of newly-seeded OpenMind says the last few weeks have showed increasing stock correlation in nearly all markets. “All stocks are suffering, even the good ones,” he notes.
“There is so much emotion in the market it is not a good time for stock picking.
Sector specific factors are more important.” Markets are reacting to macro-economic and then sector influences. “There is too much noise around stock picking. The implicit message is clearer and easier to identify in sectors.”
Abet, formerly head of quantitative research at Chevreux, has developed an outperforming sector-based strategy which he runs through OpenMind’s first fund, the €20m OpenMind Alpha Sector Ucits IV.
The ethos of OpenMind is to remain alert to all possible factors, and that approach has never been so important as now. Abet believes the old debate around growth versus value styles of investing is losing its relevance amid the current market turmoil. “Now we have to talk about domestic stocks in each market versus global stocks.”
“We started the year with a very binary mood of low beta versus high beta. Then we moved to a search for growth, where investors wanted profit and visibility. Now it is about domestic [European-orientated] sectors like financials, telecoms and utilities, versus global sectors such as autos, chemicals or basic resources.”
He said the anxiety surrounding the outlook for the Eurozone is now a well-known story. “Investors are accustomed to it; they have shorted the bank sector. But now anxiety is growing about the rest of the world, where there is still some complacency, for example, about emerging markets.”