Holly Black: I'm here at the Morningstar Digital Investment Conference with Mike Coop. He is a Portfolio Manager at Morningstar Investment Management. Hello.
Mike Coop: Hi, Holly.
Black: So, you've had to try and make sense of markets this year, and you've been speaking to clients about what some of the biggest challenges they're facing. What are some of the biggest challenges they're facing?
Coop: Yeah, I think there's these challenges around how much is the world changing around me and should I change my strategy? So, one of the questions was, is inflation going to rocket up? If that happen, there would be a pretty profound impact on most people's portfolios. Then there's a question around technology. Is that appending the world, should I just buy technology shares and sell everything else because everyone is moving online? Then there's the Covid questions around what would the economy do?
So, what we're finding is people are getting more confused, markets have been volatile, and they're questioning some of the core beliefs, because particularly some of the strategies like valuation-driven stock picking has really had a tough time. So, it's causing people to go just chuck this out the window and start all over again, and that can be very dangerous both from the point of view of getting rid of assets that are very cheap but also buying assets that are very expensive. So, it's a pivotal moment for people to make sure their strategies are the right strategies for the long term and they're not making the wrong choices.
Black: So, one of your analogies that I really enjoyed today was that of investors being a bit like Pavlov's dog. They've been dribbling away, enjoying amazing returns for years on end and suddenly things have changed. So, I mean, what tips do you give clients when they are in a panic and we are in unprecedented times?
Coop: That's a really good question, and it's a tough one to deal with because we are so hardwired to respond to the environment, to expect more of the same and to think that we should just cut our losses while we can. We know with history across markets that actually that sort of emotional reaction, the selling, usually creates great opportunities. So, when we look at any of the long-term investors who have been very successful, what you can see in Templeton's quote was buy at the point of maximum pessimism. You had the previous quote of the Rothschild's blood in the streets.
So, actually, we look at that as along with a range of other indicators to see is everyone very pessimistic, have the prices fall heavily, are we seeing good value? And that's a sign to us of look at opportunities. You then need to have the research power to distinguish a trap of something that's not going to survive from something that is by and large it creates great opportunity set for us. We get much more excited when we see that than when prices of everything are going up and everyone's very optimistic.
Black: And of course, the really exciting news today is that you're launching your own range of multi-asset funds. Can you tell us a bit more about what's going on?
Coop: Yeah, what we found is that we weren't able to offer our full range of capabilities to investors here. We've been running managed account portfolios for a long time, but we felt that there was a need to complement that with funds as well. And many of our clients have been asking us to do that. So, that just broadens out the range of things that we can do for them. It's an all-in-one solution that doesn't require rebalancing. It's a very low touch way of accessing the things that we can help them with.
Black: Mike, thank you for your time.
Coop: Thank you.
Black: And thanks for joining us.
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