Maple-Brown Abbott CIO Garth Rossler says investors are hanging their hopes on a growth rally that isn’t coming.
Investors hoping an eventual Federal Reserve pivot will spark a sharp rebound in growth stocks are misguided, argues Maple-Brown Abbott, declaring the conditions that drove the decade-long growth rally are not coming back any time soon.
But he said this approach failed to account for the “dramatic change in investment fundamentals” brought about by the rout in the bond market, warning of looming downgrades to US and Australian company earnings. “Hanging your hat on a pivot and thinking things are going to go back to the way they were is overly hopeful. You need a strong retracement in bond prices for it to be back to the races again.”
“CSL’s PE multiple has expanded considerably over the past decade or so and looks set for a further correction given where bond rates currently trade. Maple-Brown Abbott’s Australian share fund rode high in the aftermath of the dotcom boom, but its conservative style has not fared so well in boom times, underperforming its benchmark over a five-year period.
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