Graham Campbell, the firm’s chief executive, commented that the timing of the first rate rise, whether it is next month or next quarter, is “largely irrelevant and insignificant in magnitude”.
“The move will be a welcome step towards normality, rather than an attempt to sharply curtail economic growth,” he said.
Considering the ongoing accommodating stance of central banks, he believes we are still very far from the danger of a run of rate rises to dampen economic growth and inflation.
“We are confident that we are not falling back into recession and while growth is fragile, it will strengthen as central banks continue to stimulate their economies and encourage some inflation,” he added.
While there is little visibility as to when equity markets become more confident and look to factor in some growth, Campbell stressed that ‘bond proxies’ are expensive and by their nature are more resilient, rather than sensitive to economic activity.
“We aim to manage risk by avoiding mixing cyclical and financially leveraged businesses, so it is likely we will not own the shares that will bounce the highest when confidence returns,” he added.
“However, many of these businesses that we find attractive, such as BMW, Dow Chemicals, Rio Tinto and SKF will be significant beneficiaries of a modest pick-up in the global economy.
“The sustainability of their dividends, suggests we are being well-paid to wait until this appreciation of their prospects is shared by other investors.”
