PMG Funds has an enviable 30-year track record of supporting investors through economic cycles. The Tauranga-headquartered business has grown from a small group of investors’ money in 1992 to a portfolio of 40 properties managed through five investment funds valued at over $900 million. Chief Executive Officer Scott McKenzie, who recently celebrated 10-years at the helm of PMG, shares his thoughts on keeping calm through times of economic turbulence and what opportunities exist for astute investors.
The road ahead
From a geopolitical and economic perspective, the road ahead is more unclear than ever.
We don’t know what’s around the corner – but it’s likely to be a bumpy ride. Over the next year, rising inflation, high interest rates and issues with supply will reduce discretionary incomes to levels well below what we’re used to. This will add a further sense of jeopardy and complexity to investors’ decision making and will call for cool heads.
The economy is propelled in cycles, which means the market naturally rises and falls. The speed with which it does this may change, but ultimately it keeps moving forward. By having a clear and well-advised investment strategy and maintaining a long-term investment horizon with a focus on regular cashflow, these short-term market movements should be nothing to fear.
Focus on getting the most out of what you have
At PMG, we’re big believers in controlling what we can control. Careful stewardship and smart strategy allow us to keep building scale and income resilience irrespective of the economic climate. And I think this guiding philosophy is sound whether you’re managing $900 million of assets or a handful of investments.
Over the last year we’ve focused on ensuring each of our funds is well-positioned, through decreasing levels of debt, to take advantage of opportunities to grow their portfolios that may arise. In uncertain times, it’s important to have the agility to take proactive steps and not remain passive.
Equally, our fund managers talk about increasing exposure to defensive income resilient properties, sectors or companies that are positioned to survive and thrive through difficult periods, for example through uninterrupted demand or Government backing.
Our long-term view on wealth creation is underpinned by risk management through diversification. Diversification can be achieved through geography and/or exposure to multiple sectors – and it’s a philosophy that we apply to all our Funds.
Don’t invest it all at once
This probably sounds a little counter-intuitive coming from an investment fund manager, but liquidity is an essential component of successful investment, allowing you to react swiftly to better buying opportunities as they arise.
Successful investors often say, you make your money when you buy. With market volatility, what that looks like in real terms is acquiring assets that have the potential for higher returns later down the track.
This could be a property that has some vacancy and is currently undervalued but well positioned to achieve long-term market value, or one that needs development, but the cost and programme variables of carrying out that development has increased risk. Whilst no one can pick the bottom of a market, buying at the right time at good value means potentially enhancing returns when markets recover again.
Consider the bigger picture
Success is very rarely an overnight phenomenon and there are no shortcuts for investments, so make sure you do your own research and seek input from qualified people before picking your investment path.
At PMG, we don’t view all opportunities purely through the prism of growing wealth. Rather we acknowledge the need to consider the impact on the planet and our communities.
This year we published our Sustainability Report – a first for the unlisted managed funds sector in New Zealand.
Just as we have led the charge in establishing the property funds management industry over this last decade, we also want to play a leadership role in encouraging the sector to actively respond to the need for action around building environmental performance.
We’re equally passionate about improving financial literacy. It’s unacceptable that New Zealand is below the OECD average in this regard, so we continue to support this through growing financial literacy for our young people through Life Education Trust’s SMART$.
With investment, it’s important to consider the bigger picture – not just for us but for the legacy we leave for our future generations.
For more information on PMG, visit pmgfunds.co.nz/invest.
The information in this article is of a general nature and was current as at 21 November 2022. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013, and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice. Please seek advice from a licensed financial advice provider before making any investment decisions.
