FUTURE
XXXXXXX
trustnetdirect.com
value stocks. We are not sufficiently
confident that commodities have
bottomed out yet.”
Chelsea Financial Services’
managing director Darius
McDermott adds: “Outside the megacaps, including commodity, oil and
financial stocks, I do not see much
value. But if interest rates do rise, it
will be supportive to bank stocks.”
Lowcock’s key fund-pick:
CF Woodford Equity Income
US
The US was far from immune to
2015’s volatility, given the S&P 500
is up just 6 per cent year-to-date –
way off 2014’s 20 per cent tally. But
the world’s largest economy looks
in relatively robust shape given
that GDP is now estimated to have
grown by 2.1 per cent in the third
quarter, a sharp rise from the initial
forecast of 1.5 per cent, giving more
reason for the US Federal Reserve to
hike interest rates. The main worry,
given that the S&P has surged by
197 per cent since the nadir of the
crisis in March 2009, is the price tag
for investing. McDermott says: “The
US economy is doing pretty well,
but when we look at valuations
in the market, it is hard to say it is
cheap. We are neutral on our outlook
because of this.”
PERFORMANCE OF INDICES IN 2015
12%
MSCI AC World (3.44%)
FTSE 100 (0.70%)
10%
8%
6%
4%
2%
0%
-2%
-4%
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
-6%
Mar
“When will interest rates rise?” will
be the question dominating the UK
in 2016. But while inflation remains
subdued – the latest numbers
show growth in the cost of living
remained at -0.1 per cent in October
– the Bank of England is under no
immediate pressure to hike the cost
of borrowing. Overall, however,
the picture remains relatively
sound. In his Autumn Statement,
the chancellor highlighted that
forecasts for GDP expansion have
been marginally revised up for 2016
and 2017, from 2.3 per cent to 2.4 per
cent and from 2.4 per cent to 2.5 per
cent, respectively.
Surveying the macroeconomic
backdrop, AXA Wealth’s head of
investing Adrian Lowcock says:
“The economic outlook remains
positive. Consumer spending
remains strong and the economy
is still growing. But global factors,
including what is going on in
China and Europe, as well as
geopolitics, are all major influences.
The latter point may become a
much bigger issue in 2016 too.”
An elephant in the room is the
impending UK vote on European
Union membership and Coombs
believes this uncertainty is going
to remain problematic for foreign
investors next year. “The UK is the
epicentre of Europe and the EU
vote is hanging over the country,
but companies and investors
looking at Britain are thinking long
term,” he added.
Sector wise, it appears that mega
caps are offering the most value
going into 2016. Echoing the
muted global market gains, the
FTSE 100, 20 per cent of which is
accounted for by commodity firms,
is flat year-to-date.
Henderson multi-asset manager
James De Bunsen believes highquality growth stocks and consumer
staples that pay decent dividends,
such as healthcare and food firms,
are where some gains could be
made next year. However, he warns:
“Such companies are expensive, but
I would not be comfortable buying
Feb
UK
“WHEN WILL
INTEREST RATES
RISE?” WILL BE
THE KEY QUESTION
DOMINATING THE UK
IN 2016
Jan 15
T
he past year will go down
as anything but a vintage
one for investors and given
the current state of the
world, most are gearing up for
further upheaval over the coming
12 months. August featured the
defining moment, when “Black
Monday” sent shockwaves through
global markets, wiping away much
of the year’s gains.
As a result, the MSCI AC World
index is just 3 per cent higher since
the start of 2015 to December.
Looking ahead, Rathbones’ head
of multi-asset investments David
Coombs anticipates that 2016 will
be “difficult and volatile” but he
believes “there is enough growth in
the world to be optimistic”. Here is
what to expect from the year ahead.
Source: FE Analytics
7