What is JUNO’s investment strategy during the downturn?

The year has started off with significant market volatility and now we have entered a bear market. What is JUNO’s investment strategy during this downturn?

We’re focused on the long term

We want to select companies we think are robust and that have strong balance sheets to weather any storm. In particular, we want to invest in businesses we think will do well over the long term, especially when better times return.

We are preparing for a rebound

CEO + Founder Mike Taylor says in his experience, the best returns have sometimes been achieved in the following 12 months coming out of a bear market. He says his best year was coming out of the Global Financial Crisis. JUNO’s focus is to position the portfolios to benefit if a similar recovery occurs.

We want growth companies that can excel in the current climate

We have not stopped looking for investment opportunities. In the current volatile climate, we’re seeing attractiveness of more defensive sectors like infrastructure and health care. We are assessing companies based on three key questions: How defensive are the earnings for tougher economic conditions? What is the pricing power to pass on inflation? What is the balance sheet strength?

We’ve reduced our focus on tech

Our tech weighting drove JUNO’s impressive performance, in particular the Growth Fund, to the end of 2021. Since then, our investment style has been hit harder than others as the bear market correction has mostly been in technology stocks, which are usually the growth part of the market. We have now reduced our weighting in non-profitable tech. With the benefit of hindsight, we should have reduced tech at the end of last year but certain unpredictable events, like the war in the Ukraine, caused the market to sell off. But we haven’t given up on tech and it’s still one of our biggest sector investments as tech is still going to shape our future.

We’re focused on earnings over the next couple of years

The JUNO investment team is focused on where earnings are going to land over the next 12-24 months. We are constantly reviewing our holdings to assess what is at risk. The core goal of the funds will still be finding high-quality growth stocks with large growing markets, sustainable profit growth, strong balance sheets and great management teams.

We’re keeping a close eye on consumer discretionary stocks

Consumer discretionary is goods and services people buy that might be considered non-essential spending. Some stocks in this area now look very oversold, and JUNO has been adding or increasing exposure to this area.

We’ve boosted our sustainability focus

The European Green Deal, the energy crisis caused by the war in Ukraine, and cultural attitudes are driving growth in the renewables sector. 

Supporting businesses that develop and own solar, wind, hydro and battery storage assets has become a theme within JUNO. JUNO considers Environmental, Social and Governance (ESG) matters as part of our investment process. We believe good long-term returns and good management of ESG risks and opportunities go together.

We are also investing into ESG ourselves and have recently hired a Global ESG Analyst for our investment team.

Information correct as at 1 August 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.