4 words that frighten a $180 billion fund manager

AustralianSuper chief investment officer Mark Delaney shakes his head whenever he hears this at a barbecue.

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Mark Delaney manages one of the biggest lumps of money in Australia.

Since 2006 he has been chief investment officer for AustralianSuper, which now has more than $180 billion under management.

One out of every ten Australians rely on him to maximise their retirement nest eggs.

So Delaney knows a thing or two about investing, and has heard all the barbecue talk about how to grow your money.

So what's the cliché that frightens him the most for retail investors?

"There's no more dangerous words in investing than 'this time it's different'," he said at the Yahoo Finance All Markets Summit.

"Every time people say 'this time it's different', you should probably do the opposite."

Is it different this time in 2020?

COVID-19 has made for an unprecedented 2020, which could well cause permanent changes to the way we live and work.

And that's had some thinking whether the fundamentals of investment have also shifted.

Plenty of newbies have dived into the sharemarket this year, pouring in what fund manager Geoff Wilson called "non-sophisticated money".

Financial authorities and veteran investors are worried that many are in to make a quick buck and could plunge themselves into horrible trouble.

This is why Delaney advised investors to resist this short-sightedness and go long.

"The biggest risk in investing is not that you lose money in the short term," he said.

"But it's that your investments don't deliver what you want them to in the long term."

Good times follow tough times

It's a well-known investment axiom to stay the course during tough times.

But it's easier said than done when emotions take over during a global recession.

Many superannuation account holders this year would have changed their investment mix to increase their proportion of cash.

For Delaney, this doesn't make sense, because investing is for the future, not the present.

"It's like driving your car on high beam. You're not looking at the next bend — you're looking at the bend after and the one after that," he said.

"That's what investing is, looking at what's beyond what you can see in front of you."

The Reserve Bank of Australia and central banks around the world have declared low interest rates will be around for many years to aid recovery.

So for Delaney, it makes sense to put your money into the inevitable recovery out of the pandemic.

"It doesn't make any sense to invest in lower rates," he said.

"Why don't we invest in things that will benefit from the recovery in the economy, growth in earnings and businesses that are taking advantage of the structural changes that are taking place."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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