In a low-growth world, markets have been supported by ultra-soft monetary policy but slightly better growth figures from the US and China have pushed markets to consider if quantitative easing is ending.
Its cessation would mean reverting to a low interest rate world, bond markets not being manipulated and pricing mechanisms returning. Yet we do not think that QE will halt suddenly as central bankers will want to make sure a global recovery is in place before they withdraw stimulus.
That means opportunity in the ‘carry trade’. We play this through real estate investment trusts (Reits). They borrow money cheaply and then invest it in higher-yielding property.
We have just bought Silver Bay Reit, a US trust which is the only listed pure play on buying, and then renting out, single-family homes in the US. The company is ideally geared for US economic recovery and the current bullish housing market, with an already established portfolio of 3,500 units and $250m (£161.6m) cash to invest in more.
We also continue to add to Asia Reit positions which will benefit from their asset-backed qualities when inflation starts going up. Our biggest Reit holding is Singapore-listed Mapletree Logistics, a defensive play on Asian growth as it owns industrial and logistics-related real estate across Asia.
Jacob de Tusch-Lec is manager of the Artemis Global Income fund
