Volatile markets can cause much investor anxiety, but it’s important not to panic. Using our Trends as examples, we examine how it can pay to invest with a long-term mindset, stick to fundamentals and not emotions, and see market dips as potential buying opportunities.
This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.
With markets remaining volatile in 2021, it’s timely to revisit our thoughts on riding out market volatility.
Over the last year, there were many factors causing the volatility in sharemarkets – from uncertainties driven by the U.S. Presidential elections, geo-political stability and relations with China, the impact of the global pandemic and now inflationary concerns from ongoing government stimulus measures as well as the pace of rollout of the COVID-19 vaccinations and uneven recovery across different economies.
Volatile markets can cause much anxiety to investors, but it’s important not to panic.
We examine how it can pay to invest with a long-term mindset, stick to fundamentals and not emotions, and see market dips as potential buying opportunities.
Let’s put this into context. We take a look back at how each of our three managed funds (which we call Trends) have performed since they’ve launched.
Firstly, let’s see what we can learn from analysing the monthly returns of the Trends.
Out of the 66 months since the fund launched, the AtlasTrend Big Data Big Fund has experienced 46 months of positive returns and 20 months of negative returns.
Despite 20 months of negative returns, the Trend has delivered +106.14% (or +14.13% per year) for investors since launch to 30 April 2021.
Out of the 66 months since the fund launched, the AtlasTrend Online Shopping Spree Fund has experienced 49 months of positive returns and 17 months of negative returns.
Despite 17 months of negative returns, the Trend has delivered +106.48% (or +14.16% per year) for investors since launch to 30 April 2021.
Out of the 35 months since the fund launched, the AtlasTrend Clean Disruption Fund has experienced 24 months of positive returns and 11 months of negative returns.
Despite 11 months of negative returns, the Trend has delivered +46.39% (or +14.05% per year) for investors since launch to 30 April 2021.
Now, what does a chart of the performance of the Trends over time reveal?
Since inception, all three Trends have delivered strong positive returns (to 30 April 2021) and outperformed the MSCI World Daily Net Total Return ex Australia Index. This MSCI Index measures the equity market performance of shares listed on the exchanges of 23 of the world’s major developed economies ex Australia factoring in reinvested net dividends.
If an investor had invested $10,000 in the AtlasTrend Big Data Big Fund or the AtlasTrend Online Shopping Spree Fund since inception (9 November 2015) and held on to their investment to 30 April 2021, it could have grown to over $20,000 over this time.
If an investor had invested $10,000 in the AtlasTrend Clean Disruption Fund since inception (6 June 2018) and held on to their investment to 30 April 2021, it could have grown to over $14,000 over this time.
What are some possible take-outs from these charts?
- Invest with a long-term mindset: Investing in the sharemarket can sometimes be volatile, with periods of positive and negative returns. It can be worthwhile to stay committed to investing if you believe in the long-term prospects of what you’re investing in. Taking our Trends as an example, if an investor had panicked during the negative performing months and decided to sell down their investments, and not reinvested, they would have missed out on the eventual positive investment return delivered since then.
- Stick to fundamentals: There are many factors impacting the sharemarket such as the political or economic environment, which can cause unpredictable movements that swing quickly when investors overreact. We believe the key is to understand what’s driving the share price movements and whether it impacts the fundamentals of what you’re investing in. For instance, just because there are periods when the value of the Trends may fall, it doesn’t mean the structural trend of online shopping, big data or clean disruption has come to an end.
- Take advantage of buying opportunities: We saw the sudden downward shock to share markets across the globe at the onset of the coronavirus in February to March 2020. For investors that panicked and sold their investments, they would have locked in the gains or losses of their investments. Smart investors and the best fund managers often look for dips like these and see it as an opportunity to invest in some great companies with attractive long term prospects at a lower valuation.
Investing in the sharemarket can inevitably have its ups and downs. But if you believe in the fundamentals of what you’re investing in and stick to course, it can pay off by investing with a long-term mindset.