No Value Opportunities in Current Market Environment: Kenneth Andrade
Kenneth Andrade, CIO, Old Bridge Mutual Fund, shares his views on the current market environment, valuations, and sectors to avoid.
Market ValuationReal EstateIt SectorMutual FundsInvestment OpportunitiesReal Estate MumbaiAug 24, 2024
As an active manager, we need to move our lens to 2030, then we could look at some probable opportunities that would be a part of the portfolio. Edited excerpts from a chat
Investors who have made enough money in the non-stop bull run are now confused about whether they should stick with their SIPs or withdraw a decent part of their portfolio. What would be your suggestion?
SIPs are a disciplined way of averaging out different levels in the market. It has been a wonderful tool to smoothen out returns over long-term cyclicality of both the market and portfolios. What seems to be deviating right now is the trajectory of valuations and the growth of the economy. Valuations in a lot of businesses are running ahead of time – the expectations are building up significantly.
Isn't valuation the biggest risk, besides geopolitical factors, that can disrupt the bull run in the next few months?
As investors, valuation is key to determining an entrant into a new company/business. We do agree valuations are trending at a high of their band and there is a probability of a time or a price correction.
Which sectors would you suggest investors stay away from?
The current marketplace has a phenomenal amount of momentum. Valuation is factoring in multiple years of growth. Our portfolios are currently reducing exposure to some of these names. Our preference in the recent past has been to allocate to companies/businesses which are globally competitive – have finished their capex cycle and are now increasing their market share either by industry or at a company level.
Can you explain what makes you think that the real estate sector is in the early stages of topping out?
Typically, real estate sees a cycle of 8-10 years. The stocks have done well here and to date, it has been on the back of volumes. This time around, which is the next cycle – do expect real estate prices to do well. Consolidation, cash flows, and a buoyant demand environment have helped the sector to do well.
Which sectors are offering value even at this stage of the bull market?
I would not really go out looking for value in a market that has none. We have been in this state for some time now. As an active manager, we need to move our lens to 2030, then we could look at some probable opportunities that would be a part of the portfolio.
Old Bridge Mutual Fund is a leading asset management company that offers a range of mutual fund schemes to investors.
Frequently Asked Questions
What is Kenneth Andrade's view on the current market environment?
Kenneth Andrade believes that the current market environment is not offering any value opportunities.
What is his advice to investors who have made enough money in the non-stop bull run?
He suggests that investors should balance their view before taking any view of incremental investments and consider asset allocation.
Which sectors does he suggest investors stay away from?
He recommends reducing exposure to sectors with high valuations and momentum, such as real estate and IT.
What is his view on the real estate sector?
He believes that the real estate sector is in the early stages of topping out due to increased competition and consolidation.
Are there any value opportunities in the current market environment?
He does not see any value opportunities in the current market environment and suggests looking at probable opportunities that would be a part of the portfolio in 2030.
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