The fund manager, who runs Royal London’s multi-asset ‘GMap’ portfolios alongside its £13bn ‘Governed’ pension range, said it is likely there will be a sharp deterioration in confidence as the UK struggles to deal with the shock of the Brexit vote.
However, he said he does not think the financial markets will take a long time to find a resolution and will put pressure on politicians to come up with a compromise to alleviate what he described as a “messy situation”.
Mr Greetham also predicted volatility will persist throughout the summer and said he will be keeping his exposure to the UK market “neutral” because it is not certain how the UK will respond to the drop in sterling’s value.
“Sterling weakness has been positive for UK multi-nationals in the past, but there have been other times when both the currency and the stock market have fallen together.”
The multi-asset manager has instead opted for commodity and emerging market stocks, and has recently switched holdings in Europe to the US, adding: “We think Europe will be affected quite significantly from the pressure of Brexit.”
Mr Greetham, who spent nine years at Fidelity International before moving to Royal London, also said he lightened his equity holdings over April and May, after buying them quite aggressively in the first two months of this year.
While he admitted he buys during dips in the market if there is panic, he said RLAM’s research was not pointing to panic in the market, and had therefore not registered a “buy signal”.
“We are not at that stage for buying but we will be looking very closely over the next few months for increasing exposure to stocks where others are dumping them.”
Politicians and central bankers have become afraid of the markets. Peter LowmanPeter Lowman, chief investment officer at Investment Quorum, said: “It would appear that over the past few years the politicians, and central bankers, have become afraid of the markets.
“They have therefore, in times of uncertainty, supplied the markets with what they want to hear, rather than what might be sensible for their domestic economies, and more importantly the global economy.
“Therefore, is it not the case now whereby they seem to be between a ‘rock and a hard place’ and perhaps running out of ideas?
Mr Lowman questioned whether it is the financial markets job to now put pressure on the politicians to find a resolve to this “mess”, adding: “Most of the public would assume that the politicians would come up with that conclusion themselves and find that sensible solution.”
The Investment Quorum chief also said he is firmly in Trevor’s camp on his neutral position.
“Given there is so much uncertainty on both the economic and the political landscape, it therefore seems sensible to stand on the side lines and be very selective on what you own.
“However, I think there will be some good opportunities to own some excellent UK businesses over the coming months, right across the market cap range, meaning this is certainly a time for astute stock pickers.”
katherine.denham@ft.com
