78. Why expectations are too high and the pandemic remains a risk

Laura Bottega, lead product specialist for the Morgan Stanley Global Brands fund, discusses the fund’s strong performance in the recent market sell-off. She tells us that companies are probably looking at two lost years of earnings and that a V-shaped recovery is unlikely: expectations are too high and the pandemic remains a risk. “We’ve never seen a vaccine being discovered and manufactured in four years, let alone two, and that makes the outlook far more uncertain and volatile than we believe the market is assuming,” she says.

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The investment team behind Morgan Stanley Global Brands have a mantra: ‘don’t lose money’, which will possibly be as comforting to investors today, as the familiar names that can be found in the portfolio. The team looks for high quality companies with defendable and visible future earnings and invests with a high level of conviction in only 25-30 holdings: more than half of its assets are in the top ten names.

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