Caveat Emptor – Let the buyer beware

Financial Liverpool 7th March 2019

BMO Global Asset Management – Gary Potter and Kelly Prior

Garry and Kelly gave an interesting presentation on what has happened in the years post the global financial crisis and how changes in fiscal and political landscapes are likely to impact on economies of the world in the next few years. They also discussed how advisers will potentially adapt to the ever-changing landscape.

After a brief introduction to BMO’s history and its structure and the potential benefits of a ‘multi-manager’, Gary began by looking at what happened to equity and fixed interest returns during 2018 and comparing to 2019’s performance so far. It was noted that returns for 2019 have already started to make back the losses from 2018. The message being to stay the course!

However, Gary re-iterated that it will be more difficult for markets going forward, with pressures such as the transition from quantitative easing to quantitative tightening, political uncertainty, trade wars and synchronised growth moving toward synchronised slowdown. This will bring market volatility and will make it much harder to receive returns as we have in the past ten years or so. Gary stated that ‘low cost’ will not be enough, and taking more risk may not deliver more returns.

Kelly then described the BMO investment stance and how they follow ‘principles’ not ‘rules’ when it comes to investments. She highlighted, amongst other things, the importance of fund selection, looking at the fund management team and not just the performance and thus consider new funds, not just those with a track record, consider value not cost and most importantly, ‘time in’ not timing the market.

Gary then finished the presentation reiterating that volatility is back and advisers need to think about different solutions to gain returns. The overriding message was to ‘stay the course’ and to not follow the herd.