Slow economic growth in the US, soverign debt trouble in Europe and uncertainty about emerging markets, especially China, are affecting investors choices right now.
Leading fund managers gathered this week in Chicago for the Morningstar 2010 Investment Conferenceto discuss these challenges and strategies for tackling them. Many shared their views and investment picks.
Here are the highlights:
A Haven in the Storm?
Exchange-traded funds (ETFs) were heaviliy affected by the "flash crash" in May, but Bill McNabb, chief executive of The Vanguard Group, said they are still a smart place to invest.
“ETFs were a victim of the circumstance, as opposed to a cause,” McNabb said. “We think the circuit breaker steps that are being discussed right now could be very helpful.”
Dividends Key During Volatile Markets
The key for investors in an uncertain market is dividends, dividends, dividends, said Hersh Cohen, of Legg Mason Clearbridge Appreciation Fund.
He noted that over the last decade, as the stock market has behaved abysmally, dividends have gone up 6 percent a year compounded.
European Exporters Are Good Bet
European companies that export their goods are sure bets for investing, two fund managers recommended.
“We’re 50 percent invested in Europe. We look at companies from the bottom up with operational leverage, financial leverage, a sound business model and a good path to future success.”
--Wendy Trevasani, Thornburg Value Fund
China Has Got It Right
China is managing its economy well, Michael Hasenstab of Franklin Templeton Investments told CNBC Friday. He expects growth of 9 percent in the second half of this year.
“We’re encouraged that while growth will slow,” he said, “but it won’t be a hard landing.”
Hedge Fund Strategy in Mutual Fund Format
To make money now, Cliff Asness's AQR Capital Management offers the public two options: One is a hedge-fund-like strategy in a mutual-fund format and the other is based on trends, a type of managed-futures alternative.