2012 – ‘Bumper year for Irish Equity Fund investment’ Pramit Ghose

2012 – ‘Bumper year for Irish Equity Fund investment’

No, this is not a misprint. Pramit Ghose did mean 2012 in his commentary. I really enjoy reading “Pramit Ghose’s” weekly ‘snippets’ which he emails on Fridays. In his latest issue he mentions something I have been commenting on recently more and more. He expects massive inflows into his Equity funds in 2012. Why?

Investors still remain very nervous, understandably, given the crash between 2007 and 2009. However, we have already had 2 years of double-digit positive returns in the equity markets in 2009 and 2010, and almost everyone expects 2011 to be the same. Emerging Market economic growth is expected to be over 8% and global growth over 4.4%. In the latest ‘snippet’, Bernard Murphy, a senior fund manager at Bloxham, with nearly 40 years experience managing equities is quoted on investor sentiment ‘after a bear market, investors need to see three years in a row of positive performance before they return to equity markets’.

With a huge volume of Irish investors still sitting in cash, it is possible that we make the same mistakes all over again, and over commit to one asset class. Between 2000 and 2009 we held too much of our wealth in property. Now we are over exposed to cash just as inflation returns and global growth is stabilising at positive levels. There is a danger that all this cash is invested back into equities too late in 2012 just when they hit new peaks and we come to the party late. Try and avoid this by having a properly diversified investment position. Diversification is the key to successful investing, and trying to make non-emotional decisions with the help of an independent advisor. I personally buy and hold good quality, low-cost equity funds, for any funds with a long investment time frame. This is particularly true for pension funds. Making short term investment decisions is a treacherous pastime, as is following the latest investment trend.

Quotes taken from Bloxham Asset Management ‘Snippets’ email, 28th January 2011. Please seek professional independent advise before making any investment decision.

WARNING – INVESTMENTS CAN FALL AS WELL AS RISE IN VALUE

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Dave