199. How to benefit from irrational investor behaviour

Steven Andrew, manager of M&G Episode Income fund, discusses investor behaviour with us. After a turbulent start to the year, are they behaving rationally or irrationally? Steven also talks about whether the US central bank is calling the shots or if inflation is out of its control. Other topics of discussion include the parallels between Japan and the UK, if bonds or equities are the place to be in the second half of the year, and if markets have reached ‘peak fear’.
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M&G Episode Income is a multi-asset fund that invests directly in individual stocks and bonds, while property exposure is gained by investing in property funds. The name “Episode” refers to those periods of time when investors’ emotions cause them to act irrationally. The manager uses behavioural finance to find pockets of value and invest against the herd, rather than following it.

What’s covered in this episode:

  • Have investors been acting rationally this year?
  • Are markets or the US central bank leading the way?
  • Central bank moves today vs 30 years ago
  • What central banks can and cannot control
  • Why the manager hasn’t invested more in the UK
  • The parallels between Japan and the UK
  • If the market is more fearful of growth than it is of inflation
  • Have investors reached peak fear?
  • Are equities or bonds the best bet now?
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