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Category:
News /
Investments /
Investec Asset Management
/ January 2008
Investors Likely to Remain Cautious of Equities in 2008
Bad news is already priced into equity markets worldwide.
The
final quarter of 2007 saw net outflows out of general equity funds,
while absolute return funds and asset allocation funds with medium
equity exposure proved popular.
This is a function of investors’ increased uncertainty towards the
end of last year as a result of heightened fears around sub prime
issues, the US housing market and warnings of a possible recession.
These fears have intensified even further in the first quarter of
2008, as US investment banks are forced to write down further
substantial losses, the US housing market continues to deteriorate
and the recession in the US economy appears increasingly likely.
In
this environment investors are likely to remain cautious towards
equities and we envisage low equity asset allocation funds will
attract attention going forward.
It
is important for investors to remember that while the outlook for
equities in the short term is not great, much of the bad news is
already priced into equity markets worldwide, and they are not
looking expensive.
In
addition, while the consumer boom that has driven earnings and the
stock market domestically for four years has slowed substantially,
corporates are finally spending significantly and Government’s
massive infrastructure spend over the next three to five years will
continue to drive earnings and growth going forward.
So
expect slower growth and slower markets, but don’t try to time the
market. If you are uncertain, go for an asset allocation fund where
an investment professional markets the decisions on your behalf.
Don’t avoid equities; just manage your consumption thereof based on
your risk profile.
Jeremy
Gardiner is a director at Investec Asset Management
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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