When Minerva Money Management launched its first fund, the CCM Intelligent Wealth Fund, in April 2018 I was full of optimism. After four and a half months the fund was up and flying high. Then Trump started the trade war with China. Our fund was 75% invested in US and Chinese equities at the time so it was hit hard. Within weeks all of the fund’s gains were wiped out and before you knew it the fund was down! Ouch.
The last 3 months of 2018 was a painful period for the fund but one from which we have learned many lessons. The main lesson was to reduce our holdings in US and Chinese shares and to sell all of our over-valued shares. Like many investors we were sold on the FAANGS argument. FAANGS standing for Facebook, Amazon, Alibaba, Netflix, Google and Spotify. We believed that these companies were unstoppable even though we had bought them when they were over-valued. We re-appraised the situation and sold all of these equities. We sold all of our Chinese shares too.
The shenanigans of the US:China trade war caused us to not only revamp our holdings but also to totally change our strategy. We recognised that not only were the FAANGS stocks over-valued but the US stock market as a whole is over-valued too after a record 10 year bull run.
We have changed our strategy to a value investing approach as pioneered by Warren Buffet, the world’s most successful investor, and his investment company, Berkshire Hathaway.
We now invest in under-valued companies in mostly under-valued stock markets of the world especially the UK and Japan. We cannot avoid the US stock market altogether if only because it is the country which has the best technology companies in the world and technology companies form a large part of the fund. However, we make sure that all of our US shares are under-valued even if the US stock market is over-valued.
Currently we have a fund stocked full of excellent, under-valued companies. We know it is only a matter of time before the value will come through, when stock markets finally realise how much these shares are under-valued. When that happens we expect strong performance from the fund.
In the meantime the CCM Intelligent Wealth Fund is up this calendar year to date at the time of writing. I am confident that its future performance will be excellent. My optimism remains high.
If you aren’t already invested in the CCM Intelligent Wealth Fund what are you waiting for? Contact us today to find out how to invest in the fund. You know it makes sense.
