When it is your business to manage investors’ expectations and give them the whole picture, there have been better years than 2016, clearly. Bridgehouse Asset Managers is one such business, and its CEO Oliver Murray is keen to stress how taking the long view is usually the right path forward. Giving the current financial climate, however, that isn’t always easy.
“It’s a very uncertain time for investors, so what we have to do is help them distinguish between significant actions and just noise,” he says. “If you can push that aside and stay invested, you are probably going to do better in the long run.”
Bridgehouse opened its Toronto office in 2002 as the Canadian arm of US advisory firm Brandes Investment Partners. An independent platform, its MO is described as bringing institutional quality managers to the retail space in Canada. One of the few asset managers in the country to offer mutual funds and separately managed accounts, it deals principally with the big banks and higher end advisors.
As such, the expectations of clients tend to be high, so keeping them at an even keel at times of market volatility is a real challenge.
“We do a lot of work on investor behaviour,” explains Murray. “If you are constantly looking at your account you are probably going to see declines half the time and want to leave your investment. Our job as asset managers, as fiduciaries, as stewards of people’s assets, is trying to get people to stick with it in the long term.”
Such guidance seems like common sense, but when an investor reads the type of headlines that followed the UK referendum, itchy feet are an inevitable consequence. “I think a lot of the folks in the UK are now calling it Bregret,” he says. “But there are always these shocks to the market and to investor confidence. The ups and downs of 2016, when you add in 2015 and going back to the global financial crisis, it really has been a more volatile market and it’s very difficult for investors.”
Another factor to consider, at least in this country, is some engrained habits when it comes to investing. The job of firms like Bridgehouse and its advisors is to challenge these sacred cows, then offer viable alternatives.
“The home bias in Canada has been extremely large over a long period of time,” says the Bridgehouse CEO. “That has worked out well during a commodity bull market, but as that ends it’s been challenging for investors. Living in Canada, we are four or five per cent of the global world markets, so it doesn’t make sense to have 80–90 per cent of your investments only in Canada.”
With domestic growth projections not exactly anything to write home about, the pull of emerging markets for investors will only increase in the years to come in Murray’s view.
“Canada is so much a commodity story and the boom there was driven to a large extent by what was going on in China,” he says. “There has been an inevitable slowdown there, but we think in the long run, the emerging middle class in China, India, South America – that will drive growth in the long term. In the short term there are adjustments that need to be made, and I think you’re seeing that happening now.”
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