FinAtoZ Blog

5 Key learning from Morningstar conference 2018

Morningstar conference

MorningStar which is the world's leading investment research company, conducts an annual investment conference in Mumbai. In the conference it invites top financial advisers and research analysts across the globe. We at FinAtoZ got an opportunity to attend this year's event on 28th Oct, 2018. Present below is the gist of what we learnt :

Learning #1 - Average age of bear markets is just 7 months

Average age of bear market in an emerging market like India is seven months. Indian markets have not performed well in 2018. They are more likely to bounce back in 2019 - Dr. Mark Mobius, Legendary Investor

Learning #2 - Socially and environment conscious companies will do better in the long run

Companies that have high ethics and have a focus towards Environment, Social and Governance (ESG) are likely to do better compared to their competitors in the long run - Kunal Kapoor, CEO Morningstar India

Learning #3 - Risk is permanent loss of capital

"Risk is permanent loss of capital". Hence investor should not be worried about temporary volatility in the investment portfolio. Buying the "unloved" fund category leads to significant excess return - John C Bogle, CEO Vanguard

Learning #4 - Wrong investor behavior is the main cause of poor returns

It is very important to control investor's behavioral biases. Investor behavior is the key reason of making or losing money in the markets. Role of Financial Advisor is to drive right investor behavior using various tools and techniques. One of the tool that we learnt is to ask the investor to counter a particular behavior bias on his own. For example, lets say an investor who is fond of real estate. He wants to buy real estate despite of having an over allocation to real estate. Ask him 5 reasons why someone would be willing to sell real estate at a subdued price? - Steve Wendel, Head of Behavioral Science at MorningStar

Learning #5 - Emerging markets will continue to out-perform their developed peers

Emerging markets are now looking much better from a valuation perspective than what they were an year ago period. Based on the direction of US Fed rate hike cycle and oil prices, the emerging markets including India and much more likely to bounce back in the next 1 year or so. Key is to keep asset allocation intact and use any downside to accumulate more of equities. Other than India bullish on UK, Brazil, Vietnam and Romania - Jeffery Ptak, Head of Research at MorningStar

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