FTAdviser.com

Advertising

The UK stock market and wider economy should prepare itself for a harder time than most countries in the next two years, a Henderson Global fund manager has warned.

Bill McQuaker, head of the asset manager's multi-manager team, claimed the country is set to be a "relative loser" from a mild global recession.

He has been in charge of a five man team running three funds of funds - Distribution, Growth and Growth and Income - for three years.

Mr McQuaker said: "The first possibility is that as the world slows down, commodity prices will come down with it.

"That is a silver lining because it means people will get extra spending power and central bankscan think about cutting interest rates.

"The second possibility is that we are in a global slowdown and interest rates and commodity prices come down but it doesn't make enough difference and we end up in a tougher recessionary position than the one at the start of the decade.

"The markets may fall as they realise there is nowhere to hide from this recession.

"We cannot definitively say which of these paths we will go down but our best read of the markets is that it is somewhere between one and two."

But he added poor credit availability, low disposable incomes and an unnatractive currency and stock market to investors would see the outcome for the UK closer to the second option.

He added: "It is hard to see the UK prospering in a relative sense during a difficult period.

"If that is where the world goes and you are looking at relative winners and losers, then the UK is a loser. I think it will be worse off than the average.

"In the stock market, I would rather have assets nominated in other currencies and based abroad than nominated in Sterling and based here."

Mr McQuaker went on to say his team had been making "significant changes" to its funds, increasing dollar and other foreign currency exposure and moving short on Sterling.

And he said although they were underweight in equities they have been "more so", while they were taking more on in government bonds in anticipation of slowing inflation and "real economy".