US and European markets to fall further. So hedge!
Downside risk is critical when investing offshore, as there is an increased risk that the US and European markets will fall further, according to an international fund manager.
Insync Funds Management said they had 60 per cent protection over their international share portfolio as "actively managing the downside risk is just as important as identifying stocks that produce consistent returns".
Chief investment officer, Monik Kotecha, said they managed the downside risk with index puts and varied the amount protection over the market cycle, depending on the cost of the puts and their assessments of the valuations.
"Today we are around 60 per cent protection and over the cycle we can protect 25 to 100 per cent of the portfolio," Kotecha said.
"Markets are much more volatile on the down side, both in terms of its frequency, that is the number of times it happens and in terms of its magnitude as well," he said.
However, "exceptional companies" with resilient businesses, that operated in sustained growth sectors, were the best investment options in low-growth markets.
Those companies could provide growth through "innovation or new markets", highly visible and in-volatile earnings, "resilient and dominate market positioning", "strong free cash flow yield", "strong shareholder yield and a "focus on consistent and growing dividends/buy backs", Kotecha said.
Insync favoured growth opportunities in global healthcare, information technology, global consumer brands and media (including pay TV and content), he said.
Recommended for you
Perpetual has appointed a new CEO for affiliate J O Hambro Capital Management, as it tries to stem outflows and refresh the brand.
Outflows of US$1.4 billion from its US equity funds have contributed to GQG Partners reporting its highest monthly outflows for 2025 in August.
Domestic equity managers are lagging the ASX 200 in the first half of the year, according to S&P, with almost three-quarters of Australian equity funds underperforming over the six-month period.
ETFs saw almost $5 billion of inflows during August, with international equities gaining double those of fixed income funds, as total assets close in on $300 billion.
