Falling stock markets can be positive
Depressed equity markets can have a silver lining, according to Franklin Templeton director of sales and marketing, David Chang. He says Templeton, as a value investor, has found more attractive stocks moving into more attractive price territory as markets have fallen.
'We look for cheap stocks which we think are undervalued and are likely to outperform over time. So market volatility does not affect our fund-management style that much. We are a 100 per cent research house, so we go in and dig out the companies which have cheap stock prices, but have the potential within the next three to five years to come back to their intrinsic value. This is how we make money, so the impact to us is positive,' he says.
'Stocks that we liked before but viewed as too expensive have come down [and] we can buy them. Their price-earnings levels have fallen to where they fit our purchase model. So for us, it is good news because we are able to find more bargains as opposed to during a bull market.'
Mr Chang was hesitant in offering general advice to MPF members amid the given market.
'It depends on individual circumstances. Members of the MPF have to recognise that this is a retirement plan, which means it is supposed to be long term. So if you are 20, 30 or even 40 years old, you have an investment horizon of at least 20 to 30 years. You should invest accordingly. Obviously, if you are close to retirement, you should stick to low-risk funds like capital preservation funds because you don't have a lot of investment time left to live out the short-term market volatility.'
He suggested the poor equity environment of the past two years could have a positive impact on investor attitudes.
'It could be a blessing in disguise, a kind of wake-up call to investors. There is no point chasing the market. You really have to set your own personal goals in terms of MPF. This depends on your own investment horizon.
