'This is different from 2008 – and that gives me hope'

Vice chairman of investment behemoth expects rough ride but says he can see the other side of the valley

'This is different from 2008 – and that gives me hope'

For many investors, they’re at the bottom of a deep pit surrounded by volatile markets, decimated portfolios and a whole heap of anxiety.

However, one view from the U.S. might give them cause for optimism about the strength of the recovery. Rob Lovelace, vice chairman of Capital Group, said people have to stop and think about what will be different, as well as what will be back to normal, once the coronavirus crisis is dealt with.

“When you are able to focus on how much will be the same and see the other side of the valley, that’s really reassuring,” he said. “It was a much different situation during the 2008 financial crisis because we couldn’t see the other side of the valley and how we were going to reach it.

“But this time is different, and that gives me hope. While the global economy and financial markets are going to be challenged for some time and government leaders will have to make tough decisions, I believe we will make it through this.”

Lovelace admitted that the immediate future will be a rough ride but that he knows some companies are going to do well, particularly some of the internet firms and market leaders that Capital, which manage US$2 trillion, have had in its portfolios for a long time.

Pharmaceutical companies are obvious beneficiaries, particularly in the U.S., while there are a few other companies around the world that are working on promising vaccines. He added that the consumer staples and food industries have been holding up as have beverage makers, while the real estate market should benefit from lower rates, although the commercial side will suffer due to a potential hit to small businesses.

He explained: “Increased internet traffic helps phone and communications companies that benefit from higher data usage, and utilities benefit from lower rates. The positive trend for communications and utilities is most pronounced in markets outside the U.S.

“Another interesting pattern I’d point out is that quality growth companies in the technology and internet spaces with strong cash flows and strong balance sheets have been holding up.”