GLOBAL - Most managers of global equities funds are cautious on the outlook for the markets and expect a deeper recession than in the early eighties, according to Standard & Poor's.
S&P Fund Services lead analyst Alison Cratchley said: "The managers' caution is understandable. They have just come out of the fourth consecutive quarter in which investors in global equities funds lost money.
"In Q3, the median mainstream fund returned -19.2%, bringing year-to-date losses to 28.2%."
Cratchley highlighted some of the strategies currently being followed by the managers.
Among the managers looking to increase their defensive positioning were Robert Burdett and Gary Potter of the Thames River's multi-capital fund.
They cut UK exposure by 1.5% to just over 12% by reducing funds with a more domestic bias, as they became more concerned about the outlook for sterling assets. They also trimmed Europe to just over 13% of the portfolio.
In terms of regions, Burdett and Potter favoured Japan over most other markets on the grounds that Japan had avoided most of the credit issues that had plagued other economies.
They said the Japanese market looked uniquely cheap on a price-to-book measure and its dividends seemed better supported than those of other major markets.
Meanwhile, DWS Akkumula and DWS Vermögensbildung I fund manager Klaus Kaldemorgen said he was maintaining a high level of cash (15-20%) in both funds, using futures on the EuroStoxx and S&P 500 to take advantage of market volatility.
Kaldemorgen said he was expecting a deeper recession than in the early eighties, and claimed it would last more than three quarters.
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