Overview
In this webcast, Jeremy Grantham, co-founder and long-term investment strategist, shares his updated views on the current superbubble, its parallels to past bubbles, and ways to navigate ahead. Jeremy is joined by portfolio strategist Rick Friedman, who describes the opportunity embedded in Equity Dislocation, GMO's high-conviction strategy designed to benefit from the unwind of the Growth bubble.
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Key Points
- During the presentation, Jeremy explains the difference between a run-of-the-mill asset bubble and a superbubble – a 2.5 sigma or greater deviation from trend with today’s spanning multiple asset classes and geographies. In describing the various phases of a superbubble, Jeremy shares his view of where valuations and fundamentals stand across various assets and provides a pessimistic view of what lies ahead.
- Jeremy underscores that it is not too late in the bear market cycle for investors to reposition their portfolios to protect from further downside volatility. He explains some of the ways he looks to protect assets in the current environment, including by allocating to GMO’s Equity Dislocation Strategy.
- We believe GMO has a unique ability to navigate market dislocations, and the GMO Equity Dislocation Strategy aims to take advantage of one of today’s most extreme dislocations. Rick provides an overview of Equity Dislocation before diving into the opportunity remaining in the strategy broadly and across various sectors. Rick also explains how Equity Dislocation can act as an important diversifier to still expensive growth equities.
A helpful offset to growth drawdowns
On average, Equity Dislocation has generated +0.4% on NASDAQ down days
EQUITY DISLOCATION RALLIED IN PERIODS NASDAQ FELL >5%
Returns from 10/30/2020 (inception) to 8/31/2022 | Source: GMO
Performance data quoted represents past performance and is not predictive of future performance. Net returns are presented after the deduction of a model advisory fee and incentive fee if applicable. These returns include transaction costs, commissions and withholding taxes on foreign income and capital gains and include the reinvestment of dividends and other income, as applicable. Fees paid by accounts within the composite may be higher or lower than the model fees used. A Global Investment Performance Standards (GIPS®) Composite Report is included in the Important Information section at the back of this presentation. GIPS® is a registered trademark owned by CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. Actual fees are disclosed in Part 2 of GMO's Form ADV and are also available in each strategy's Composite Report.
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