The past year has been rough for many investors, with professionals certainly not immune from poor performance.
The QVG Capital team admitted 2022 was a disaster in a recent memo to clients, with the fund losing 23.4%.
The QVG analysts attributed this to three reasons.
"We started this year with a 'highly rated' portfolio. which was de-rated through the year due to rising rates," read the memo.
"We did not own any companies in the hottest sectors (energy and resources). We made some stock-specific mistakes — e.g. holding City Chic Collective Ltd (ASX: CCX) too long and Symbio Holdings Ltd (ASX: SYM) at all."
The QVG team is again expecting a difficult 2023.
But investors might be surprised to hear what they are doing.
"We expect next year to be a tough one for the global economy. Despite this we are almost fully invested."
'Patience is required'
So if they think 2023 will be rough, why are the QVG professionals sticking to ASX shares?
"This is because prospective returns from our portfolio holdings are compelling and when the market turns it tends to move quickly."
The memo reiterated that no one is able to forecast when the bottom will pass and those stunning returns will materialise.
"Because of this, some patience is required," stated the team.
"Now is not the time to get too glum."
'The best formula for strong performance'
The QVG team has an investment strategy based on investing in three types of stocks — "buying balance sheets, businesses with high through-the-cycle returns and organic growth potential".
They will not deviate from that philosophy, regardless of what 2023 has in store.
"Over the long-term we believe this is the best formula for strong performance," read the memo.
"In the short-term we are not making any bold predictions but promise to stay humble, hungry and eat plenty of our own cooking."
Despite the terrible performance in 2022, the QVG fund has returned 89.21% since inception, which equates to 12.71% per annum.
"Economic growth will slow next year, but we're not trying to time the market and are mindful the strongest gains in markets can occur immediately after a bottom."
