Jonathan Marriott, chief investment officer at Vestra Wealth also took the opportunity to put money to work in equities yesterday.
He told Portfolio Adviser that he and his team took a step back from the screens yesterday and looked at where dividend yields were as a result of the falls.
“There was a lot of noise and, my feeling was, when people came back from their holidays they would look at the gilt market and look at where dividend yields were and the money would go into equities.
“But,” he added, “I have a conviction we are staring at a low inflation environment for a prolonged period of time.”
As a result Marriott has a bias toward the FTSE 250 and, in particular those stocks that are more domestically focused.
But, he said yesterday the firm put money back in via the index.
“You don’t necessarily want to be in the tracker long term, but then it was a case of buy the index and we will worry about the finessing the detail later on.”
Jacob de Touche Lec, manager of the Artemis Global Income Fund is a little more circumspect.
“My view has been for the past six months that we need some kind of normalisation. But, to get there we needed some signs of growth so that the Fed could begin to raise rates. And, we were beginning to get there,” he said, but the signs of the positive feedback loop needed to lift confidence has now been broken.
“Every time you get a crack in the rally, it gets harder to rebound,” he added. “The trade over the past five years or so has been buy the dip. But the dips are getting bigger now.
“I still think that on a 12 to 18 month view US rates will have to go up. But, we are still in an incredibly tough transition from unlimited QE to normality, but it may have been postponed now.
As a result of this view, de Touche Lec has over the past few weeks been rotating out of some of the positions he had taken up in anticipation of a rate hike in September.
“I have taken money out of US financials and have bought back into defensives like Imperial Tobacco,” he said.
He has also bought more shares in Apple, a stock he sees as a defensive.
Of course, he says, the risk is that we get one or two good data points, and China managing to stabilise things and we are be right back to where we were two weeks ago. But, the probability of that have diminished.
That is always the risk of sales, of course – there are always bargains to be missed. But, sometimes, there is a reason the shop in question couldn’t quite shift its merchandise.
