By Dave Carpenter
Tense financial times have only heightened investors’ interest in finding bargains and safe harbors.
With Europe, China and the debt overhang complicating the outlook, they may be relying more on ideas from experts, such as the 1,850 financial planners and fund managers who attended the annual Morningstar Investment Conference last month.
Numerous professionals offered up their single best investment ideas:
“We’re on our way to 9 billion (population) and it’s going to be extremely ugly. Running out of resources is going to play a big role in everybody’s lives from now on, particularly in the poor countries, although we may be able to fake it for 20-30 years. Think favorably about resource funds,” said Jeremy Grantham, chief investment strategist, GMO LLC.
Blue chips and junk bonds
“We like high-quality stocks — Chevron, Intel, Johnson & Johnson, McDonald’s, Microsoft — and low-quality bonds. These bonds yield 7 percent or more, so you’re being well-paid for the risks,” said Matt Freund, portfolio manager, USAA.
“Express Scripts, a pharmacy benefits manager, has a near-majority market share and will benefit from an aging population, more generic drugs and society’s need to lower health-care spending,” said Paul Larson, Morningstar equities strategist.
“Senior loans (loans that take priority over other debt in case the issuer goes bankrupt) are the place to be. They pay periodic coupons on time and have excellent financial strength at a time when investors are looking for yield with some level of interest rate protection,” said Kamal Bhatia, head of taxable fixed income and alternatives for OppenheimerFunds.
“Invest in companies that run lotteries or provide technology for them. Governments are going to have to rely more on lotteries and other new ways of getting revenue. We own Lottomatica, the world’s largest operator of lotteries,” said Bernie Horn, president and portfolio manager of Polaris Capital Management.
Real estate, infrastructure
“Buy real estate stocks or infrastructure-related stocks — utilities and companies that build toll roads and airports. They generate high yields, so think of them as some downside protection,” Andrew Smith, chief investment officer of the client solutions group at Northern Trust. — AP