While 2020 has shown us that we can’t always predict what a year has in store, there are still some good reflexes to rely on to better prepare for the year ahead.
The NBI Global Equity Fund’s portfolio manager Fiera Capital explains how its approach focusing on higher-quality companies can pay off in the long run. Check out the comments from the portfolio manager of this fund, which is included in several NBI Portfolios1.
The stock market had a memorable, roller coaster kind of year. First, COVID-19 led to an unprecedented market decline followed by an exceptional rebound. Then there was a slight return to a sense of caution followed by a rise in global stock markets in the wake of the U.S. election and encouraging vaccine news.
In such an eventful year, the main challenge is to remain disciplined and have the patience to not react hastily and be led by your emotions.
It is essential not to be influenced by external factors and conversely, to put things into perspective and take the time to ensure that our companies’ long-term investment theses remain valid.
Long-term investors enjoy a major advantage: they are able to determine the true value and potential of a company in which they invest over several years. This allows them to take advantage of volatile markets, whose vision is often influenced by short-term objectives.
When markets get excited, the value of a company’s long-term quality attributes—such as high barriers to entry, strong pricing power, sustainable competitive advantages and a strong management team—is often underestimated by markets, creating bargains for the most patient investors.
It is only by looking at compound returns over several years that it becomes possible to detect the prevalence of high-quality strategies.
We generally hold our positions over an investment horizon of several years, not months or quarters. We always strive to identify high-quality companies with sustainable competitive advantages that operate in industries with high barriers to entry. These two elements give them considerable power in the pricing process.
We remain confident that our bottom-up, fundamental, authentic approach focused on higher quality companies will continue to deliver strong long-term returns in any macroeconomic environment.
1 The NBI Global Equity Fund (the “Fund”) is offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Fiera Capital Corporation acts as portfolio manager for the Fund.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Fund before investing. The Fund’s securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Fund is not guaranteed, its values change frequently and past performance may not be repeated.
Views expressed regarding a particular company, security, industry, market sector, future events (such as market and economic conditions), company or security performance, upcoming product offerings or other projections are the views of only Fiera Capital Corporation, as of the time expressed and do not necessarily represent the views of National Bank of Canada and its subsidiaries (the “Bank”). Any such views are subject to change at any time based upon markets and other conditions, which could cause actual results to differ materially from what Fiera Capital Corporation presently anticipate(s) or project(s).
The Bank disclaims any responsibility to update such views. These views are not a recommendation to buy or sell and may not be relied on as investment advice.
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