Investors should be prepared for a turn in the cycle, as any upcoming recession is likely to be short, said Ed Smith, co-chief investment officer at Rathbones Investment Management.
Speaking on FTAdviser’s podcast, Smith said there are very few markets predicting that a recession will turn into a financial crisis.
“The difference between a regular to mild recession in terms of the financial markets reaction is very different compared to a severe crisis, like a recession,” he said.
There could be a bull market run towards the end of the year, he said, and investors should be getting ready for what they might invest in when it comes to that.
Smith said some parts of the market he is looking at for this purpose include global high-yield debt, as well as lower quality segments of the equity market.
“The beginning of the cycle [tends to be] the only time when lower quality markets outperform."
Richard Clode, portfolio manager at Janus Henderson, said it is important to balance expectations and valuations.
“If you can get reasonable expectations combined with rational valuations, you can start positioning yourself in advance.
“We have started already stepping into those high quality secular growth names that we felt had come down to reasonable valuations,” he said.
“We want to start positioning ourselves early.”
sally.hickey@ft.com
