The Ophir High Conviction Fund (ASX: OPH) released its April report this morning and provided investors with an update on its portfolio and its market view.
Have share markets gone too far?
Ophir notes that share markets have rebounded very strongly from their March lows.
This is despite the impending release of "the worst economic data the world has seen since the Great Depression" over the next few months. This data will include the "sharpest falls in GDP, the highest unemployment and the largest contraction in corporate earnings in many countries."
However, the fund manager believes things are very different to the 1930s.
It explained: "Unlike the Great Depression though, it is our opinion that this crisis is likely to be much shorter, though there will likely be some lasting impacts on consumer behaviour."
The fund manager warned that it is difficult to predict how the market will react to the upcoming economic data. However, as it is a long-term focused investor, it isn't being put off and remains heavily invested.
Furthermore, it notes that this crisis is "as much about ascertaining what long term changes we might see in consumer buying behaviour as it is about avoiding the immediate losers."
Which leads us on to Ophir's portfolio update. The Ophir High Conviction Fund's investment portfolio returned +12.1% during April.
Key drivers of its return were payments company Afterpay Ltd (ASX: APT), artificial intelligence company Appen Ltd (ASX: APX), and gold miner Evolution Mining Ltd (ASX: EVN).
This was offset slightly by the underperformance of shares such as private health insurer NIB Holdings Limited (ASX: NHF) and medical device company ResMed Inc. (ASX: RMD).
Ophir notes: "Both Resmed and NIB Holdings suffered some payback in April for being two of the only 25 stocks in the ASX300 that went up in March. Both have been significant outperformers since the onset of COVID-19."
Should you be investing in the share market?
I think Ophir is spot on with its assessment. Over the next few months we are likely to see some horrific economic data, but I remain confident the recovery will be far swifter than the Great Depression.
In light of this, I think investors ought to continue investing in the share market. And particularly companies which are continuing their growth unabated during the pandemic such as Afterpay and Appen.
