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Is it time to pivot from growth to yield?

Is it time to pivot from growth to yield?

With interest rates hovering near zero, and growth stocks looking toppy, it’s getting tougher for investors seeking a reasonable return. Thankfully, there are some fairly priced businesses in unloved parts of the market that are still offering a decent yield.

Themes emerging from COVID-19

Since the COVID-19 sell-off triggered our search for bargains in the stock market, our Montgomery Small Companies Fund has successfully navigated lockdowns, re-openings and the expectations surrounding a vaccine by investing in several themes. Today, we share an additional theme in response to the Reserve Bank of Australia’s decision earlier this week to cut the Australian Official Cash Rate to 0.1 per cent.

One of the early themes was investing in companies that themselves were investing in their e-commerce platforms. During the harshest phase of Australia’s lockdowns these companies have been able to capture a growing share of the spending by recipients of government handouts forced to shop from home. And with only 11 per cent of all Australian retail sales conducted online (excluding groceries) compared with double that number in the US and the UK, the runway for growth remains long.

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INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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