Pictet Asset Management’s Four-Step Stock Selection Methodology | Packed with Practical Insights

Moreover, today’s largest companies are capturing an ever-increasing share of the market—so naturally, these are the best companies to watch. Take Apple and Amazon, for example: both boast exceptionally strong balance sheets, plus a crucial advantage—access to capital markets. Recently, Amazon issued a three-year bond in the bond market with a yield of just 0.4 percentage points. So why would anyone consider their current prices expensive? For companies with relatively high entry barriers—established industry leaders—we see absolutely no issue. Add to this the current financial environment, where organic growth is increasingly hard to find, and these companies become even more valuable. Thus, we believe technology stocks still hold substantial value. Of course, we do not favor all tech stocks. Our preferences include e-commerce and cloud computing sectors. Companies must feature disruptive business models, healthy balance sheets, and no need for government fiscal support. As for biotech stocks, many have already priced in their full growth potential, so we remain cautious. We must also highlight our strong conviction in semiconductors—the foundational building blocks of all modern technologies. Beyond U.S. and mainland Chinese tech leaders, we also favor semiconductor firms across Asia, including Japan, South Korea, and Taiwan. Barron’s China Edition: Your fund is a publicly offered mutual fund. Have you conducted any research on your investor base? Roughly speaking, what socioeconomic or income groups constitute your investors—and how do they view the trade-off between returns and volatility? Investors in China may differ significantly from those in Europe. Huang Siyuan: For European investors, our fund is perceived as a bond-like component within a multi-asset portfolio: their primary objective is positive returns, with higher returns being a secondary aspiration. In contrast, in China and elsewhere, multi-asset funds are often viewed as equity substitutes—investors seek equity-like returns but with lower risk. Roughly half of our international multi-asset investors are institutional, while the other half are retail investors. (By contrast, Pictet’s Strategy Fund targets primarily retail investors.) Some investors seek assets delivering equity-like returns—but without equity-level volatility. Volatility is critically important for our fund. Let me illustrate with an example—though we do not hold this stock. Take Tesla: its share price has tripled this year—a massive gain. Yet long-term holders know that Tesla’s stock performed poorly for extended periods in the past, once plunging by as much as 60%. Only investors who held through that entire drawdown could realize today’s gains. For individual investors, however, liquidity needs arise at various times—buying a home, a car, or insurance. If such a need coincides with a 60% loss, it could severely disrupt their financial plans. Moreover, recovering from steep losses is extremely difficult. We also recognize that certain Chinese investors differ from their Western or American counterparts—they tend to be more aggressive. Still, I believe A-share market reforms in China have matured investors considerably.

Foreign Media: Pictet Asset Management Expects 10% Global Equity Market Gains in 2021

China News Network Client Report, January 5: According to Reuters China, Swiss asset manager Pictet Asset Management stated on Tuesday that equity valuations and investor sentiment are both unusually elevated, and it has upgraded its stance on equities to “overweight” while downgrading cash to “underweight,” forecasting a 10% rise in global stock markets this year. According to the report, Luca Paolini, Pictet’s Chief Strategist, noted that the global economy continues to benefit from massive emergency fiscal measures, and the emergence of COVID-19 vaccines has allowed markets to focus squarely on economic recovery. Furthermore, fiscal stimulus supports corporate earnings and offsets declining price-to-earnings ratios. He added that risks of near-term policy missteps—or a sharp surge in yields akin to the 2013 U.S. Federal Reserve taper tantrum—are low over the next six months. “Therefore, although equity valuations and investor sentiment are unusually elevated, the likelihood of a near-term correction remains low,” he said. Luca Paolini also stated: “We forecast a 10% rise in global equity markets this year and anticipate global real GDP growth of 5.8%, above the consensus forecast of 5.1%.”

Pictet Asset Management Holding SA Purchases 67,588 Shares of International Flavors & Fragrances Inc.

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Pictet Asset Management increased its stake in International Flavors & Fragrances Inc. by 10.8%, acquiring 67,588 shares worth $57.66 million. IFF reported strong Q3 earnings, beating estimates alongside a $2.5 billion stock repurchase plan.

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