Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Vincent Ropers. He is Manager of the Wise Multi-Asset Growth Fund. Hello.
Vincent Ropers: Good morning. Howdy.
Black: So, do you want to tell us briefly what the Fund does?
Ropers: Sure. The Wise Multi-Asset Growth Fund is, as the name suggest, a multi-asset fund that invests in other funds, predominantly investment trusts. It is a Fund with a fully flexible mandate, and that aims to outperform equities with less downside. So, we're trying to, over the medium term, which we define as 3 to 5 years, perform better than equities, and outperform inflation. So, you should have a bit less risk in our strategy.
Black: Oh, you said the magic word there, inflation. Obviously, that's something on investors minds at the moment. How is that affecting the way that you're positioning the portfolio?
Ropers: Well, inflation is certainly an area that we're not trying to predict. We don't see that as an area where we've got particularly expertise. But we think about it in terms of how we manage the risk in the portfolio. And if we look at our current asset allocation, we've got a lot of exposure to equity value strategies, which I think are well-positioned in an inflationary environment. We also have decent exposure to commodities, and miners. There again, a good inflation hedge. We also have exposure to gold. So, we think we are relatively well-positioned. If we were to see a spike in inflation. This isn't a core scenario for us, but it's just something that we think about in terms of managing the risk in our portfolio.
Black: I feel like we're playing investment bingo today, you're saying all of the good words. So, you said there is a lot of value in the portfolio. Are you expecting that value rally that we've seen this year to continue?
Ropers: Yes, I think so. Well, I think the key to remember is that we've been waiting for that value rally for a very long time, pretty much since the great financial crisis. So, despite the rally that we've seen, that started in Q4 last year, there is still a lot of room for value to catch up with the growth strategies. And we think there is a lot more to come. What is for sure is that this rally is not going to continue to be with the same magnitude that we've seen, it's not going to be a smooth path, there's no doubt about that. But we think there is still a lot more to come. And our growth portfolio, to give you an idea, is about 40% exposed to global value strategies.
Black: And you also mentioned there is exposure to gold in the portfolio, do you think that still offers the protection that investors have historically relied on it for?
Ropers: I think in terms of thinking of gold in terms of protection is probably a mistake, because even when we look historically, that protection has been quite erratic. It tends to work in – when the market is seeing increased volatility, when there is inflation coming through. But this can come with quite a lag. So, using that purely as a hedge is quite tricky.
The way we access gold is through gold miners, however. And so there our view is that, at the back of our mind, some gold exposure could provide us some hedge, if we see a spike in risk, but the key to our investment thesis is really to look at those gold and silver miners and see how strong their balance sheets are, how cash flow generative they are and how undervalued they are relative to other sectors in the market. So, we see that really as the core of the investment thesis is the value that we see in those miners. And then the gold potential protection characteristics is a bit of a cherry on top of the cake.
Black: Vincent, fantastic. Thank you so much for your time. For Morningstar, I'm Holly Black.
