One of the fund managers from global investment outfit, Scott Berg from T. Rowe Price, has said that markets are in a bubble.
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What's the track record of this fund manager?
There are many different opinions out there, so it may be worth paying attention to a fund manager that has performed well.
Scott Berg has important responsibilities for different funds. One of the funds that he is involved with is the T. Rowe Price Global Equity Fund. He took over running the fund in June 2012. Since then, the fund's net returns have been 19.4% per annum and over the last five years that fund has produced net returns of 19.9% per annum.
It's a truly globally-focused fund, with 54% of the fund invested in US shares. At the end of February, some of its biggest 10 holdings include: Amazon.com, Alphabet, Alibaba, Evotec, Facebook, Goldman Sachs, Rivian Automotive, Apple and Charles Schwab.
"Markets are in a bubble"
The Australian Financial Review quoted Mr Berg who said that he believes some valuations have gone too far and that markets are in a new bubble.
He had a number of interesting comments about the market:
When I look at retail sentiment, when I look at some of the crazy things going on, when I look at valuations above average, I think that we're probably somewhere in a bubble but it could be very early and this makes it really tricky to navigate.
We're far from the peak of a bubble, in my humble estimation. But equally, I think there are a number of bubblicious-type things. And so expect volatility, expect dispersion.
When I look at retail sentiment, when I look at some of the crazy things going on, when I look at valuations above average, I think that we're probably somewhere in a bubble but it could be very early and this makes it really tricky to navigate.
So what shares are T Rowe looking at?
Not Tesla, he apparently has sold over 90% of the position in Tesla, whilst still being optimistic about the company's long-term prospects. He's still positive about the electric vehicle market – as I mentioned, the fund owns a position in Rivian.
Amazon has bought 100,000 electric delivery vehicles from Rivian – showing the level of demand.
There are the shares that I mentioned that earlier in the article that the T Rowe fund owns.
He's also thinking about growth shares that have been sold off as investors recently in the rotation to value shares.
The AFR quoted Mr Berg, who said:
What excites me about a number of these growth stocks is that it's actually contrarian to buy Zoom video right now.
If you ask someone what the valuation of Zoom is right now, they are not even looking at it. They just say: 'Mate, that's not going to work for you. That was a COVID beneficiary, we're in a value trade'.
