Don't try to time the markets, says expert

Have a well-diversified equity portfolio and don't focus on picking the next shiny sector

 Published on Sep 29, 2013

By Alvin Foo Economics Correspondent

Trying to time financial markets in these volatile times would be foolhardy, according to a leading fund manager in the region.

Retail investors should, instead, adopt a dollar-cost averaging method of regular investing, with a balanced and diversified approach, said Mr Jed Laskowitz, the chief executive of JP Morgan Asset Management (JPMAM) Asia-Pacific.

He told The Sunday Times: "Timing the markets doesn't work... individual investors tend to become too euphoric in the good times and too negative in the bad times."

That leads them to sell at the bottom and buy at the top, Hong Kong-based Mr Laskowitz added.

He advocates having a well-diversified equity portfolio while not being too focused on picking the next market or sector which will shine.

"What you tend to see is investors buying past performance," he noted.

"Investors need to stay away from chasing last year's best-performing asset class, and build a long-term investment plan that's well diversified across stocks and bonds and geographies and stay true to that plan."

JPMAM manages US$1.47 trillion (S$1.84 trillion) worth of funds globally as of June 30, with US$126 billion being Asia-Pacific client assets.

Mr Laskowitz noted that stocks are still not that popular with investors: "The great rotation out of bonds to equities hasn't quite happened... most clients don't own enough equity in their portfolios."

That is because many investors still feel the sting of the global financial crisis, thus they prefer to keep significant amounts of their wealth in cash.

This behaviour is particularly true in Asia.

"Investors are still concerned with volatility. The markets in the last five years have traded more on macro events than fundamentals," he said.

Mr Laskowitz also weighed in on the surprise decision by the United States Federal Reserve to maintain its massive money-printing measures.

He said upcoming events such as the appointment of the next Fed chairman, the US debt ceiling debate and US budget may have been considerations for the Fed's delay.

"The decision to wait is a sound one... as there are potential challenges those items could create," noted Mr Laskowitz, who added that the market consensus is that the Fed will start winding stimulus back in December. "But as we've seen this time, it's not so easy to predict".

He also unveiled plans to expand his firm's Singapore headcount.

The firm has 54 staff here, of whom 17 are investment professionals. It hopes to grow this to 65 employees with 21 investment professionals by the end of next year.

The funds management industry here recorded gross fund flows of US$12 billion in the first half of this year, with net fund inflows of US$4 billion.

JPMAM's market share is 17 per cent of the total net industry flows.

Its client assets under management here grew 32 per cent between December 2011 and July this year, said Mr Laskowitz.

"More of our clients are growing here and are making more of their investment decisions out of Singapore," he added.

alfoo@sph.com.sg

Background story

Stick to the plan

"Investors need to stay away from chasing last year's best-performing asset class, and build a long-term investment plan that's well diversified across stocks and bonds and geographies and stay true to that plan."

MR JED LASKOWITZ, chief executive of JP Morgan Asset Management Asia-Pacific