Becket: Get ready to buy
The PSigma manager says that as long as Greece is the only country to leave the euro, the impact on markets will be relatively muted.
By Mark Smith, Reporter, FE Trustnet
Thursday May 24, 2012
Investors should view a Greek exit from the eurozone as a buying opportunity rather than a horseman of the apocalypse, says PSigma’s Tom Becket (pictured)
The manager of the £14.8m PSigma Dynamic Multi Asset fund says that while volatility will persist for some time to come, bold investors will eventually be rewarded.
"Everyone is truly bored of discussing the risk that Greece poses to markets," he said.
"As long as the departure list is kept to Greece then asset markets appear to be cheap and we would add risk to our portfolios. Equities globally appear realistically priced and the best income opportunities are now to be found amongst quality equities."
He added: "Interestingly the impact that Europe is having on global markets presents opportunities across global equity markets, which in part makes sense in a globalised world."
"At current estimated valuations you would have to be judging that companies' earnings were going to be reduced significantly, primarily because of the impact from Europe, to create an overtly bearish view on equities."
European equities have been hit indiscriminately by the crisis. Data from FE Analytics
shows that the average European ex UK fund has lost 18.39 per cent over the last 12 months.
However, Becket remains positive about the health of the corporate sector and believes shrewd investors can find attractive propositions on depressed valuations.
"Certainly we believe the extreme volatility created by the 2012 vintage of the European crisis is throwing up potentially richly rewarding opportunities across global markets, but certainly there are some interesting opportunities in European markets," he explained.
"The global growth of European companies' earnings has not been rewarded because of the fact they are domiciled in Europe. When the volatility subsides, as it surely will at some point, then there will be fantastic opportunities for us to take advantage of."
Our data shows that the PSigma Dynamic Multi Asset has performed roughly in line with the average Mixed Investment 40%-85% Shares fund, losing 4.99 per cent over the past year.
Performance of fund vs sector over 1-yr
Source: FE Analytics
What remains to be seen is whether other peripheral European economies can stave off the threat of contagion.
Becket said: "If other peripheral countries follow Greece out of the euro than cash and gold bullion would be your only safe-haven options, not least because eventually we believe that the contagion from the European debt crisis could spread to other government bond markets, such as those in the UK and Japan."
"Quality will be the order of the day, so some defensive equities and corporate bonds might look expensive now, however they could become a lot more expensive."