DIY Investor Magazine
| August 2017
7
EUROPE
Growth is coming through which helps support
valuations. The managers of
Fidelity European Values
say earnings are currently growing in double-digits year
on year and think that, despite the many political threats,
the ultimate driver of markets is real dividend growth.
COMMODITIES AND NATURAL RESOURCES
Commodities markets coming back into balance, oil
prices too low
Ed Warner
, chairman of
BlackRock
Commodities Income,
says low valuations and the
chance of a recovery in commodities prices could boost
the sector.
The managers of the fund think companies have been
repairing balance sheets rather than investing in new
production and this is bringing supply and demand
back into balance.
They also believe that, on a two year view, oil prices are
unsustainably low.
UK PROPERTY
Brexit concerns are driving a flight to quality but, unless
we have a recession, property outside London may be
more resilient
Mark Burton,
chairman of
AEW UK REIT,
thinks it is too early to see what the impact of Brexit on
the UK property sector will be.
The managers of the fund point out that the market
has started to regain the value it lost in the immediate
aftermath of the vote.
They say that, outside Central London, there are fewer
concerns about occupier demand and the greatest
risk is of a Brexit-induced recession. Retail property
specialists, Intu, have seen a flight to quality in the UK.
As yet, UK consumer spending has not been affected
materially – they point to the Bank of England’s forecasts
that wage growth will overtake inflation as we go into
2018 as a sign that things might be ok. They have some
exposure to Spain where they expect that recent strong
economic growth will persist.
TECHNOLOGY
A sector that can deliver growth even against economic
headwinds
Julian Cazalet
, chairman of
Herald
, thinks
companies with genuine growth may become more
expensive. We recently published a note that includes
the manager of that fund, Katie Potts’, thoughts on the
sector.
Robert Jeens
, chairman of
Allianz Technology
, says
the heightened sense of overall risk levels does not alter
the growing importance of new technology across the
global economy and hence the case for strong relative
performance. Walter Price, manager of that fund, points
out that the growth in technology is coming from the
creation of new markets, rather than simply GDP growth.
OTHER
In addition, we have comment on the healthcare
sector from
BB Healthcare
, on the debt sector from
TwentyFour Income Fund
and a detailed look at the
financials sector from both the chairman and managers
of
Polar Capital Global Financials
.
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