Page 19 - DIY Investor Magazine | Issue 33

STAYING INVESTED
There are many lessons we have learnt from previous volatile periods. Like so many things in life, it is often two steps forward and one step back.
‘IT HAS ENCOURAGED EUROPEAN COMPANIES TO PURSUE GREATER INNOVATION AND EFFICIENCY WHICH WILL RESULT IN GROWING DIVIDENDS FOR INVESTORS’
We must avoid being overly bullish when optimism is on the rise and we must avoid being too despondent when bad news surfaces. Put simply, it pays to stay invested whatever the headlines.
We do not try to predict which uncertainties will become realities. We do, however, try to build a balanced portfolio, where stockpicking - and our focus on attractively valued dividend growers - will drive the performance of our portfolio over time.
In this regard, it is important to recognise that a lasting effect of the pandemic is that it has encouraged European companies to pursue greater innovation and efficiency which will result in growing dividends for investors on a multi-year view.
Each individual stock position is, of course, subject to macroeconomic factors, but the advantage of diversification
is that exposure can be dampened through portfolio construction, allowing idiosyncratic elements to determine performance. Clearly, sometimes we face stylistic headwinds in the short-term.
Our preference for steady growers, sometimes tagged as bond proxies, can mean we face a headwind to performance when inflation expectations or bond yields rise. Over the long-term, however, these factors even out and relative performance, good or bad, is primarily a function of stock-picking.
Our focus on attractively valued dividend growers with strong balance sheets has remained a key feature of the portfolio as has the rigorous approach to stock selection. These factors have benefited investors across a range of market conditions over the years and we believe that it will continue to do so in the future.
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DIY Investor Magazine · Apr 2022