Welcome to the JUNO Market Update.
In this video, Gordon Gomes from the Client Services team speaks to CEO + Founder Mike Taylor. They answer questions sent in by investors and cover:
- How have markets been going this month and are there any signs of recovery yet?
- How do rising interest rates impact investing?
- Given inflation is on the rise, should JUNO be investing in commodities, for example, oil or gold?
- How does Mike, and the wider investment team, keep a cool head during volatile times?
We have also provided a transcript.
Thanks for watching.
JUNO Market Update April 2022 from JUNO Funds on Vimeo.
Gordon Gomes: Welcome to the JUNO KiwiSaver monthly update. My name is Gordon, and I'm from the client services team. With me today is Founder and CEO Mike Taylor. Welcome Mike and hello to everyone watching.
Mike Taylor: Hey Gordon.
GG: Mike, we have a question here for you from Summer. How have the markets been going this month? And have there been any signs of recovery yet?
MT: Yes, there was a little bit of recovery in the second half of March. However, things have started to turn a little bit south again, as we head into April. And that is the same concerns that we've had before, it's about inflation, it's about interest rates. Interest rates, they just keep going higher, almost every day. So I think that's the main reason that the markets are selling off.
GG: Thanks, Mike. Another question for you that Marie has asked, how do rising interest rates impact investing?
MT: So interest rates have got an interesting relationship with markets and with property as well. If you think about it, the lower the interest rate, the better it is for the asset class because people can borrow money cheaply, and then invest it in other things like bonds or shares or property. So with interest rates rising, it's putting more pressure on company valuations effectively. So the cost of money is rising, and that's what investors don't like. So, when the cost of money rises, markets tend to go down.
GG: Interesting and you know, given that inflation is on the rise, should JUNO be investing in commodities, for example, oil or gold?
MT: That's an interesting one actually. Firstly, the JUNO KiwiSaver Scheme has an exclusion for fossil fuels, so we won't be investing in any oil companies in JUNO. They, of course, have been one of the best-performing industries in the markets in 2022. But we're not investing in that. So we can invest in other commodities. So we could invest in… we have been looking at gold for example, we've been looking at copper, lithium, and even some fertilisers. So they've all had significant price rises. So we're looking at it with a lens of a little bit of patience at the moment, because we think that some of the commodity prices will settle back down from the big spikes they had after Russia invaded Ukraine. And we have already seen that with oil I mean, I think oil got US$130 a barrel, now it’s back under US$100. So yeah, it's more settled now. And we think the commodity theme has probably got a long time to play out. So if you look at car batteries, for example, they need copper and they need lithium and the amount of electric cars that’s going to be produced every year for the next decade, is going to increase significantly. And from the research that we've done, we can see there's actually a significant shortage in some of those commodities, and that some new mines will need to be opened or some way we're going to find additional supply to meet the demand. [Tesla founder] Elon Musk tweets on it regularly, particularly about the price of lithium… he's become quite frustrated about that. Even kind of considering whether Tesla needs to have their own lithium mines.
GG: Right, and now one that’s a bit more personal. How do you and the wider investment team keep a cool head during volatile times? What do you do to keep your stress levels at bay?
MT: It's a challenge and you know, it is a very stressful job. And the first thing you’ve got to do is you know, if you can't cope with stress, and maybe you need to find somewhere else, find another job, find something else to do. And I think everyone's different. There does tend to be a common theme of exercise. So whatever it is people do for exercise, whether they're going to play sport or they go for a run, that tends to be a great way to release a bit of stress. For me personally, I like to go for a walk. I've got a little bit into some slightly alternative ways of dealing with stress. Some people might have heard of this, called Wim Hof, which is essentially where you have ice baths or cold water therapy. So I have a cold shower every morning. And I go for a brisk walk for half an hour. I live quite near to a big park, so out in the wild. Come back, have a cold shower and I try not to look at my phone the first hour of the day. And I find that to be really helpful to kind of set the tone for the day. Last thing you want to do is wake up in the morning and then you check your phone and oh my gosh, markets have fallen and then you can have a bad day right? So if I can set my tone of how I want to feel for the day, before I look at any work stuff, I find that really helps.
GG: Thanks Mike. If you have any questions you'd like answered on future videos, please send them through to [email protected] Thank you everyone at home for watching, and we will see you next time.
Information correct as at 12 April 2022. Pie Funds Management Limited is the issuer and manager of the JUNO KiwiSaver Scheme. Click here for our Product Disclosure Statement. Any advice is given by Pie Funds Management Limited, and is general only. It relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees if you act on any advice. As manager of the Scheme we receive monthly fees that are determined by your balance and whether you are 13 years or over. We will benefit financially if you invest in our products. We manage any conflicts of interest via an internal compliance framework designed to ensure we meet our duties to you. For information about the advice we can provide, our duties and complaint process and how disputes can be resolved, visit www.junofunds.co.nz. All content is correct at time of publication date, unless otherwise indicated. Past performance is not a reliable indicator of future returns. Returns can be negative as well as positive and returns over different periods may vary. Please let us know if you would like a hard copy of this disclosure information.