Investors have experienced much volatility already in 2022, and many experts predict the rest of the year won’t be much smoother.
WAM Leaders Ltd (ASX: WLE) portfolio manager John Ayoub reckons portfolios are currently in “a game of 3D chess” at the moment.
“I say that because we are juggling rate movements, we are juggling coronavirus and now we are juggling more on Ukraine and Russia,” he told a conference call to clients this month.
“From that perspective, it makes it awfully difficult to get a clear and confident path as to the shape of the portfolio for the next month, let alone for the next 6 to 12 months.”
To combat the uncertainty, Ayoub is currently looking for very specific attributes in ASX shares he’ll purchase.
“Two clear characteristics that the portfolio is now demonstrating a lot more than previously [are] quality and defensive earnings attributes,” he said.
“That’s really where we see our safe haven within the portfolio to ride out this volatility over the next little while.”
The fab 5 to hold onto this year
Ayoub named 5 specific ASX shares that his fund has added recently that meet this “safe haven” definition:
- Brambles Limited (ASX: BXB)
- Endeavour Group Ltd (ASX: EDV)
- Tabcorp Holdings Limited (ASX: TAH)
- Wesfarmers Ltd (ASX: WES)
- Treasury Wine Estates Ltd (ASX: TWE)
The fund manager said his team has been taking advantage of a “dislocation in the market”.
“We see their earnings, their ability to withstand the volatility of global events, particularly in the short-to-medium-term, as key drivers within the portfolio.”
The 5 companies include merchants that provide staple products and those that will see a growth in activity and earnings regardless of interest rate rises.
“Staples [and] inflation beneficiaries are the areas of the portfolio which have become more present and more prominent,” he said.
“We are at the coalface daily and managing risk and adapting as we get new information. That is what we are really focused on right now.”
WAM Leaders itself has gained 2% this year so far to trade at $1.52 on Thursday afternoon. As of the end of February, the listed investment company was trading at a 3.4% premium to net tangible assets.