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Unusual levels of bearishness going into 2016

Unusual levels of bearishness going into 2016

Unusually high levels of bearishness have made shopping around harder for fund managers, Mark Slater, chief investment officer of Slater Investments, has said.

He said: “Our working assumption since 2008 has been that life will be tough for the average business so the logical conclusion is to try and avoid the average business. In our growth fund that is easier to do because one is investing in very niche businesses that not terribly GDP related.”

However, in the income fund that is less the case and there is more GDP exposure, but Mr Slater’s view is that life is tough and that has not changed since 2008.

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“The level of bearishness coming into the new year was unusually high. The challenge has been that valuations have been high, so it is hard to go shopping, but we are still finding value.

“It makes life more difficult for everybody, but then that can change so quickly, so I am not terribly worried about it - it will be difficult as normal.”

According to Financial Express, over the past year Slater Growth returned 16 per cent compared to its benchmark, the IA UK All Companies, which made 0.5 per cent.

The fund, which invests entirely in UK equities, is £338.3m in size and its biggest holding is drugs firm Hutchison China Meditech, at 8.7 per cent of the fund.

In terms of sectors, 23.8 per cent of the fund is invested in telecom, media and technology, while 18.6 per cent is invested in services and 13.21 is in pharmaceuticals.

Meanwhile, Slater Income returned 10.7 per cent compared to its benchmark, the IA UK Equity Income, which made 1.8 per cent.

The £107.5m fund’s biggest holding is healthcare Reit Assura at 4.56 per cent. In sector terms, financial services make up 13.94 per cent of the fund, while insurance makes up 12.59 per cent and real estate makes up 12.21 per cent.

Mr Slater’s comments came just before the FTSE All-World index entered into bear market territory for part of yesterday (20 January) as oil prices slid to new lows and investors fled for the safety of high-rated government bonds.

Fear rippled through global markets, taking the UK, French and Japanese stocks to more than 20 per cent below their 2015 highs.

The US S&P 500, the Dow Jones Industrial Average and the Nasdaq briefly fell more than 3 per cent to more than 10 per cent below their prior peaks, meaning they entered a market “correction”, but rallied in afternoon trading, with the S&P 500 closing yesterday down 1.2 per cent.