With the S&P/ASX 200 Index (ASX: XJO) currently up a healthy 11.56% year to date in 2021 so far, and up an even healthier 20.46% over the past 12 months, capital preservation is probably not at the forefront of most investors’ minds right now. Why preserve your capital when you may miss out on these exciting gains, one might ask. But capital preservation is at the forefront of investment group Janus Henderson Group’s (ASX: JHG) thinking right now.
Indeed, the British-based investment group tries to put capital preservation at the top of its priority list. That’s whether we sit in a temperate investing climate or a tempestuous one. That’s according to the perspective of Jay Sivapalan, Head of Australian Fixed Interest at Janus Henderson.
Janus reveals its investing ‘North Stars’
Mr Sivapalan states that Janus Henderson’s perspective for market volatility has been guided by “our investing North Stars”. These include:
Expectations of a gradual ‘normalising’ in cash rates around the globe lifting risk-free yields
Holding inflation protection when it’s cheap
Recognising that income producing assets will remain in high demand during a period of low risk-free rates (spread sectors, including credit)
Investing with a cautious mindset
Aiming to fully participate in the cyclical growth uplift
On the prospects for future inflation (which consideration of is paramount in the fixed interest space), Mr Sivapalan states the following:
We still see a role for some modest inflation protection given cyclical pressures from challenged global supply chains and the wider opening up of the economy from late 2021. This is despite breakeven inflation rates moving into the bottom end of the RBA’s 2-3% target band…
We have also invested opportunistically in higher yielding sector securities, but have avoided investing in global high yield and emerging market corporate debt which can be more sensitive to interest rate moves.
Of course, the macro risks in the fixed interest and bond markets differ considerably from those that share market investors face. But these comments still give investors some valuable insights into how professional investors might be positioning for higher inflation and future interest rate hikes.
Janus Henderson share price snapshot
According to its latest quarterly update, Janus Henderson now has US$419.3 billion in assets under management. The company’s share price is up an impressive 51% year to date in 2021 so far. As well as more than 76% over the past 12 months. At the current Janus Henderson share price of $63.97, this company has a market capitalisation of $12.8 billion.