Venn Brown sat down with Global Portfolio Manager John Moorhead, to discuss his investment process and his views on the current market outlook.
Too small a pond: Australia makes up just 3% of the global equity benchmark, yet many local portfolios are heavily concentrated in domestic stocks. Moorhead sees this as a material risk: the ASX lacks scale and sector diversity, and its highest-priced companies often show the weakest earnings growth. For investors seeking meaningful returns, this concentration may prove limiting. For domestic investors, he believes tech offers a better growth profile than traditional sectors like banks and resources, but selectivity is key.
Global lens, refined focus: Moorhead’s investment process applies three filters, quality, valuation and change, to narrow the vast global universe. He targets long-term trends like demographics and de-globalisation, and uses quantitative tools to uncover high-return companies showing performance shifts.
A world of valuation gaps: While US markets dominate headlines, Moorhead highlights opportunities in Europe, Japan and select emerging markets. These regions trade on far lower earnings multiples than the US but are undergoing structural shifts, like infrastructure spending in Germany or fiscal reform in Brazil, that could drive future growth.
Macro with a mandate: Moorhead’s experience in emerging markets reshaped his view of macroeconomics. Political shifts, fiscal policy and currency volatility often override company fundamentals. As global governments grow more interventionist, macro factors are no longer peripheral; they’re central to managing risk and spotting opportunity.
Volatility as a strategy tool: In a world of macro and market uncertainty, Moorhead sees volatility not as a threat, but as a tool. With government bonds and cash yielding real returns for the first time in a decade, investors can wait and deploy capital when markets dislocate. He stresses the importance of aligning asset allocation with long-term goals and staying nimble enough to act when opportunity arises.
Signals of change: For those without institutional tools, Moorhead suggests tracking valuation and earnings momentum to spot opportunity. Markets showing analyst upgrades or rising returns on capital may be in the early stages of outperformance. ETFs offer accessible ways to align portfolios with long-term global trends.
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