The manager of the Old Mutual UK Alpha fund went so far as to say that “with this election now mercifully behind us, and the threat of a cliff-edge ‘no-deal’ Brexit waning, there may just be some cause for optimism that risk appetite will make a return.”
At a sector level, Buxton has taken a shine to the housebuilders, which were badly bruised after the Brexit vote and were hit again in the immediate aftermath of the general election.
“The most significant potential impediment to the sector’s continued progress had appeared to be a discontinuation of the Help-to-Buy scheme, of which there was no mention in the Conservative manifesto,” he explained.
“As we enter an era of increasing anti-austerity, the scheme’s survival prospects may now improve.”
He also stressed that a “backdrop of accelerating global trade” would be good for the large-cap natural resource companies populating the FTSE 100.
As for the British banks, which remain his fund’s largest overweight at 25.6%, Buxton admits that “it is likely to be a question of hope being, once again, deferred” until market interest rates normalise to pre-financial crisis levels.
“To some degree, this will depend on whether the US central bank, the Federal Reserve, follows through with its earlier policy and hikes interest rates, and the extent to which president Trump continues to be frustrated in his efforts to make reforms,” he said.
