Buy from the pessimists and sell to the optimists

Remember Brexit? The UK’s unexpected vote in late June to leave the EU led to a dramatic collapse in market sentiment. At the point of maximum pessimism, the FTSE 100 was down 8% on the day. Yet within a week the FTSE had recovered all of its ground, and then gained another 10% within 6 weeks. Sentiment is a powerful force in markets, creating significant inefficiency that can be traded upon. Sentiment is one of five key inputs to AMP Capital’s new exchange traded managed fund, the Dynamic Markets Fund (Hedge Fund), ASX:DMKT. As Nader Naeimi, Head of Dynamic Markets explains in this short interview: “Pessimism, or even hate, toward an asset class is actually good. What we want to do is to buy from the pessimists and sell to the optimists.” Watch this video to see how he quantifies sentiment levels, and to hear the four other key inputs to the investment process.