‘No winter lasts forever; no spring skips its turn’ – Hal Borland

For many it was the warmest day of the year last Saturday and finally it appears the rather lengthy bout of cold weather may be at a close. With the weather – as with investments – the darkest hour is often before the dawn which raises the question about whether you should even try to time the investment markets if all that is required to eventually enjoy the warmth of a summer’s day is patience.

Quite popular at the moment are graphics showing just how much return you would have missed out on over the last twenty years if you had not been invested at the time of the ten best individual days. It is quite a big drop. Hence investors are urged to stay invested at all times because predicting precisely when these ‘ten best individual days’ will be is difficult.

There is some truth in this and driven by such observations and fear of being too different from their peers for business risk considerations pension funds will tend to be fully invested at almost all times. Given the naturally longer-term investing timeframe focus of most pension fund investors – after all these are monies for their retirement – and the monthly contribution set-up for most of the investors this is probably quite sensible. However as any student of diversification and correlation will attest you can get better results from mixing with such an investment another which is much more dynamic, tactical and simply put different.

This is a role the Dynamic Opportunities Fund can play in investors’ overall portfolios. We take the view that whilst looking at the last twenty years of investment returns is very useful you have to be mindful that regime shifts do happen. From our perspective the last couple of decades has been a truly wonderful time for investors across multiple equity or fixed income markets even if there were bouts of high volatility – and transitory sharp losses – in both 2001-2 and 2008-9. There is little doubt that significant central bank stimulus and ultra low interest rates helped significantly especially over the last decade. There is also little doubt that this era is coming to a close and global portfolio management will benefit from being more global and more willing to take profits on successful investments – rather than looking to hold them forever – and sometimes just hold plain old cash for a sustained period of time.

As we have seen over recent months sometimes the Dynamic Opportunities Fund zigs when the mainstream pension or investment fund fraternity zags. Our willingness to buy into both the UK and Eurozone recovery potential (including strong performances from names including Greene King, Dunelm, Whitbread and Royal DSM over the last week) rather than be a ‘me too’ investor into a range of US technology stocks is a good example of this. Such an approach will continue to be at the heart of what we do. After all, we all know the value of a thick coat in winter and a shady spot at the peak of summer.