The past week has been tough on growth investors. Simmering worries over trade tensions and rising interest rates spilled over into equity markets, culminating in the S&P 500’s tumbling 3.3% overnight. The losses were even worse among shares of technology companies with the S&P 500 Information Technology sector posting a 4.8% loss on the day, with CNBC reporting it was the worst day for the space in 7 years.
Not surprisingly, the portfolio companies in our two growth-focused Funds had a tough day. Rather than lick our wounds, though, our team hit the office energised this morning. Extreme bouts of volatility might terrify short-term speculators but, for the long-term investor, volatility spells opportunity. As Lord Petyr Baelish once said, “Chaos isn’t a pit. Chaos is a ladder.”
Our team has spent today putting cash to work across both our Funds. And, thanks to our large cash positions heading into this latest rut, we have plenty to work with: the Lakehouse Small Companies Fund and Lakehouse Global Growth Fund ended September with cash balances of 12.1% and 17.0%, respectively.
All that said, while we’ve been enthusiastically at work since before sunrise, it’s worth remembering that a single day or week’s price movements does not make or break the returns of a long-term investor. Indeed, for all the drama and intense headlines, the S&P 500 has only retraced back to levels it saw just months ago in July. As we’re fond of saying in our monthly letters, “our team does not judge itself based on short-term results and neither should investors who embrace our long-term, high-conviction strategy.”
We don’t know what the future holds but, judging by how futures are looking, tomorrow looks like it could be another tough day in markets the world over. From the perspective of our long-view, cashed-up team, we are ready to act on the opportunity.
The information included in this message has been prepared without taking account of the reader’s objectives, financial situation or needs. All of the commentary, statements of opinion and recommendations contain only general advice. Past performance is not indicative of future performance.
The responsible entity for both the Lakehouse Small Companies Fund (ARSN 615 265 864) and the Lakehouse Global Growth Fund (ARSN 621 899 367) is One Managed Investment Funds Limited (ACN 117 400 987) (AFSL 297042). Investors should read and consider the Funds’ product disclosure statements, which are available online, before deciding to invest in or redeem units from the Funds.
