Ask A Fund Manager
The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Medallion Financial managing director Michael Wayne tells of the 2 best options for long-term 'sleep at night' investing.
The ASX share for a comfortable night's sleep
The Motley Fool: If the market closed tomorrow for 4 years, which stock would you want to hold?
Michael Wayne: It's a challenging question because companies, when they come out with their updates every February and August, you're able to make an assessment.
But look, if I go boring, I could say an index ETF, maybe in the US, we think is a pretty good way of going about that.
Or something like WAM Capital Limited (ASX: WAM), maybe not now, given the big premium that it trades on — but a good quality fund manager with a long-term track record.
Otherwise, if I was to go an individual stock, again I'd probably have to go boring here and go something like a CSL Limited (ASX: CSL). Something with an entrenched growth path and a long-term track history of delivering on management's forecasts.
They're the options I think people could consider.
MF: It's interesting that you raised ETFs and LICs as options, because among 55 episodes of Ask A Fund Manager, you're the first who's said that. It makes a lot of sense because they're the most stable and reliable over the longer term, aren't they?
MW: You're getting a diversified portfolio and… the market over a 4- or 5-year period should do quite well. So that way, if you just go for a broad exposure, that could turn out to be the best option, because anything could happen with a business. They can have a [bad] update and get on a downgrade cycle or whatever it may be.
