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It’s time to embrace themes and equities, argues SharingAlpha’s Peter Ahl

Nicholas Earl, 08/04/2021

As fears of a third wave of Coronavirus cases mount in mainland Europe, with Germany locking down until mid-April and the introduction of new social distancing measures in France, it would be tempting for fund selectors to revert back to the more cautious outlook that characterised investment behaviour throughout the early periods of the pandemic.

Yet, despite the potential for significant volatility, Peter Ahl, investment consultant for Gräsa Consulting and one of SharingAlpha’s highest rated fund selectors, remains resolute in his optimistic disposition. He believes that the fundamentals – such as sustained fiscal stimulus and the continued rollout of multiple vaccines– mean that this is not a time for caution for investors. Not only will the markets be positive, but there will be alpha generating opportunities.

In his view, concerns debt, inflation and rising interest rates pale in comparison to the reality of strong worldwide growth in a period of definitive economic recovery, that will define the latter half of 2021.

He explains: “There are higher inflation expectations and rising interest rates, but that's not really surprising considering where we are at the moment. We are looking at an incredible turnaround for the economy in the second half of the year, supported by enormous fiscal and monetary stimulus.”

While volatility was highly likely, he believes this will present more buying opportunities than setbacks. After all, real yields are low, and a business environment defined by an imminent opening up of the economy would provide undervalued possibilities, alongside a chance to ride the waves of revival.

Summarising his outlook, he says: “I don't think this is the time to be bearish [on] equities, really.”

Mr Ahl is an independent investment adviser, and provides his services such as analysis of products, fund selection, fund evaluation and portfolio construction to clients based in Sweden. He is also a contributor to SharingAlpha, which aims to become the TripAdvisor for fund selectors.

Typically, his work prioritises themes over regions or particular asset classes. His perspective is a marriage of both his unyielding optimism and his forecasting of key future trends, which he believes can provide long-term investment opportunities. Chief among his interests is the global energy transition, a highly competitive and popular theme within environmental, social and governance (ESG) investing.

This theme is particularly resilient to headwinds. He feels that new technologies and sustainable energy solutions will be sped up by a period of growth while also being supported in any periods of downturn from the pandemic such as from raising inflation. Overall, this perspective meant he was becoming more reliant on macroeconomic factors alongside investment fundamentals, a situation that was increasingly common following the pandemic.

Commenting on his investment approach, he says: “We are dependent on both monetary and fiscal policy today. That's for sure. If something happens in the future where you have to take back some of the stimulus, for any reason, such as inflation rising, then that of course will have great effects on what's happening. The energy transition is dependent on what different governments are doing but I see that's more like a bonus because this is a transition that will happen anyway.  It will just speed things up, if you have the help of governments.”

Alongside the macroeconomic reliance, Mr Ahl notes that his style of fund selecting requires a very unconstrained approach, not tied to any specific discipline or geographic location. In previous conversations with fund selectors, the possibility of moral dilemmas in emerging markets has been mentioned, with Hjerta’s Daniel Rock elaborating on his issues with investing in non-democratic countries. Mr Ahl does not have such an absolutist perspective, but he believes that when investing in China, fund selectors should be very careful about the ethical implications.

He says: “I wouldn't say I would exclude China totally, but I would try to have an extra layer. You should check with the investment manager and how they look at the countries they invest in if it's an emerging market fund.”

This nuanced approach to investing in a market with a moral dimension is possibly the only example of caution in Mr Ahl’s unambiguously positive perspective on the markets this year. When asked for his final thoughts about possible challenges in the markets, he essentially rebuts the question, arguing there is I too much focus on problems in the market than possibilities. In particular he notes that the increased digitisation of the economy and the online social experiences are factors that will define our lives following the pandemic and will provide positive returns well beyond the cyclical period of recovery.

He concludes: “I'm very positive on what will happen, going forward from here. I think the bias is too negative if you look at the debate about the markets. Coming out of the pandemic, there will be many possibilities for companies.”

Peter Ahl was interviewed by Fundeye as part of its series on SharingAlphas top fund managers and selectors. 

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