Market Volatility
Maintaining a long-term perspective in volatile markets
Ada Zhang
Managing Director

We believe that a long-term perspective and deep, fundamental research are essential to delivering solid, consistent results to our investors

2020 was a year marked by unprecedented volatility: stocks declined sharply from late February to March, followed by a remarkable nine-month rally that lifted several key market indexes to all-time highs. Government bonds advanced as central banks around the world slashed interest rates and ramped up stimulus programmes in an attempt to counter the damaging effects of the COVID-19 pandemic.

For the 90 years of Capital Group’s history, we’ve seen market and health crises impact global populations and markets. Like past crises, COVID-19 has become a critical consideration within our investment process. Our stability and adaptability as a company enable us to maintain our focus on delivering long-term, superior results to our investors.

We take a long-term view

Since our founding in 1931, Capital Group has been owned primarily by the people who work here. Private ownership is a cornerstone of our ability to think long term when it comes to planning and investing. Among other things, it allows us to avoid the quarterly earnings pressures that can constrain publicly-traded companies and lead to short-term thinking. This means that in times of volatility, we can hold a steady course and continue to invest for the future.

Capital Group’s approach to compensating analysts and portfolio managers is designed to be ”all-weather” and incentivises them to produce strong results in bear markets as well as bull. We believe that this approach is one of the reasons many of our strategies have historically demonstrated resilience in challenging markets.

Collaboration and sharing of investment ideas and strategies are fundamental to the ongoing success of Capital Group’s investment process. The collaborative culture of Capital Group is particularly valuable in challenging environments as it harnesses the collective experience of our investment professionals. Many of our long-tenured portfolio managers have worked through multiple market crises over the decades. Whilst each of these crises have had different causes and characteristics, the cumulative experience of managing through them is beneficial.

Navigating tough markets with fundamental research

Capital Group has been singularly focused on delivering superior, consistent results for long-term investors using high-conviction ideas, rigorous research and individual accountability. Its multiple-manager system, The Capital SystemSM, has allowed it to navigate periods of economic and market uncertainty using an approach that combines independent high-conviction decision-making with the diversity that comes from multiple perspectives.

We commit significant resources to global investment research in our efforts to determine a company’s true value. We place great value in staying connected with the businesses in which we invest. This need to maintain a high level of connectedness became even more paramount in 2020 when – due to the pandemic – our in-person meetings stopped. The switch to virtual meetings actually meant our investment group increased contact with companies; in all they participated in 20,000 meetings during the year. Our team of more than 400 investment professionals adapted to ensure their level of contact with companies remained high during the pandemic, although, over the long term, we believe there is no replacement for on-the-ground research.

Ada Zhang is a managing director at Capital Group, responsible for the institutional client base in the Asia ex Japan, ex Korea region. She has 11 years of investment industry experience and has been with Capital Group for eight years. Prior to joining Capital, Ada worked in marketing at Legg Mason Asset Management. Before that, she was in marketing and investor relations at 3 Degrees Asset Management. She holds an MBA from National University of Singapore and a bachelor’s degree in operation research from Fudan University, Shanghai. She also holds the Chartered Financial Analyst® designation. Ada is based in Singapore.

Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.