Not to beat this coronavirus thing to death (To death? Really? As if it's drawing to a close? No, this is going to be with us for a while), but I felt I would be remiss if I did not take this opportunity to bring you the latest and greatest about the crisis from PBS's WealthTrack program Thursday night. There is so much gloom and doom out there, even though the flu is so much more contagious and so much more deadly. It's really the disruption of global supply chains and the threat that poses to triggering shortages of basic materials and a global recession that has everyone, at least in the financial world, so much on edge. I suspect that a month from now we'll have much more clarity on this situation; it will by then be either a full scale pandemic or be considered under control and, if hopefully the latter, things will then go back to normal. I hope this WealthTrack program will provide some more clarity and relieve some concerns. Enjoy the remainder of this very pleasant and sunny weekend.
3-5-20 CHINA CORONAVIRUS AFTERMATH - A message from Consuelo - March 5, 2020
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March 5, 2020
Dear WEALTHTRACK Subscriber,
The coronavirus has gone global and as it has traveled from its starting point in China to other parts of the world so has its damaging effects on health, confidence, business activity and the markets. Despite the Federal Reserve’s emergency half- percentage-point cut in short-term interest rates on Tuesday investors have been pretty much selling stocks and looking for safety and stability, largely in U.S. Treasury securities and gold. The yield on the 10-year Treasury note fell below one percent for the first time ever this week. (Yields fall when bond prices rise.) The 10-year is an important benchmark for numerous borrowing rates including mortgages. The average rate on a 30-year fixed rate mortgage fell to 3.29%, the lowest on record. Meanwhile gold is trading near a 7-year high at $1,668.20.
While the coronavirus saga unfolds, we want to re-focus on China, the world’s second largest economy and Asia, one of the world’s most vibrant and fastest growing regions to assess the damage and opportunity this terrible virus has created.
Joining us this week for a special podcast is Robert Horrocks, Chief Investment Officer and Portfolio Manager at Matthews Asia. Matthews is a U.S. mutual fund pioneer in Asia. It is now the largest Asia only investment firm in the U.S. with more than $25 billion in assets under management including 15 mutual funds.
Horrocks manages the firm’s Asian Growth and Income Strategy, and co-manages the Asia Dividend and Asia ex Japan Dividend Strategies. He recently published a perspective titled “Current Conditions Call for A Long-Term Focus” and is optimistic about China’s future performance.
During this second week of the spring fundraising season on public television WEALTHTRACK might be pre-empted in many stations over the weekend. As a result, we are revisiting a recent Next Generation interview with great investor Chuck Akre and John Neff, his Co-Portfolio Manager of the top ranked Akre Focus Fund.
We are always on the lookout for the exceptional on WEALTHTRACK. It’s not easy to find among actively managed mutual fund managers. Only 23% of actively managed funds in all major categories, including stocks, bonds and real estate outperformed their passive index fund rivals over the last ten years. And only about 8% of U.S. large cap funds outperformed passive, the smallest margin among all active fund categories winners. No wonder that active U.S. stock funds are experiencing substantial outflows and passive stock funds are gaining assets. In an historic shift, passive assets in U.S. equity funds recently surpassed those in actively managed ones for the first time ever.
This week’s guests are bucking all of those trends. They are active managers in primarily large cap U.S. stocks. They have been beating the market and peers by substantial margins over the last decade and they are attracting more assets.
Joining us for a rare interview is Chuck Akre, Founder, Managing Member, Chief Executive Officer and Chief Investment Officer of Akre Capital Management which he launched in 1989 and moved from a suburb of Washington D.C. to rural Middleburg, Virginia in 2002.
Of the approximately $13 billion Akre Capital manages, nearly $12 billion is in the flagship, Akre Focus Fund which he launched ten years ago. Akre Focus is rated five star and carries a Silver Medalist Analyst rating from Morningstar and has a superb record, beating the S&P 500, the Russell 1000 Growth Index and its Large Growth category by substantial margins over multi-year periods, including 17% annualized total returns since inception. It’s done so with a concentrated group of companies, only 17 holdings currently, most of them which it holds for years.
Another key member of the Akre team is John Neff, partner at Akre Capital Management, who joined the firm as an analyst in 2009 and is now Co-Portfolio Manager of Akre Focus Fund. Neff is not related to the late great investor by that name. He is building his own reputation at Akre Focus and is off to a good start.
If you are unable to join us for the show on television, you can watch it on our website. If you would prefer to take WEALTHTRACK with you on your commute or travels, you can find the WEALTHTRACK podcast on TuneIn, Stitcher and SoundCloud, as well as iTunes and Spotify.
Thank you for watching. Have a lovely weekend despite the fact that we will lose an hour’s sleep as we “spring forward” to Daylight Saving Time. Make the week ahead a profitable and a productive one.
Best regards,
Consuelo
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