His solution has been to “smooth the ride” for investors by taking advantage of hedged share classes for US equities. “Currency diversification is important for clients,” he says. “By diversifying your risk, you are also reducing your currency risk.”
Perera may have brought a top-down refinement to the team at Canaccord Genuity but the firm’s staff have their own bottom-up creativity, which reminds him that “you don’t just look at the world simply in terms of stocks and bonds”.
“I discovered things I didn’t even know existed in the investment world by joining this firm, such as infrastructure investments, re-insurance, leasing, bank loans, alternatives. Most of the large firms have never heard of these asset classes, let alone are able to deliver them to their clients.”
Perera also prefers the culture at Canaccord Genuity, as it is not married to a particular investment idea, strategy or outlook. You are allowed to and, indeed, encouraged to change your mind.
Unloved financials
“Most people in the investment world at the strategist or CIO level are either perma-bulls or perma-bears. But the value of asset allocation is being able to change your mind. I like this type of market today; tomorrow, I don’t like it. That’s where the value lies.
“As an investor, you have to be willing to accept all the different ideas and change your mind.”
Staying true to this culture, Perera and his team have changed their minds often since the beginning of the year.
“We were quite sceptical about European equities because there was a huge amount of negative publicity about all the political risk in Europe,” he explains.
Perera figured out earlier than others that fears of a populist domino effect in Europe, driven by the results of the Dutch, French and German elections, and resulting in the disintegration of Europe, were “exaggerated”. Amid cries of Europe’s annihilation, he sought value in Europe’s unloved financials.
