Chatfeild-Roberts back in tech but warns of deflation in US
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Jupiter director of independent funds John Chatfeild-Roberts has warned that the US is facing a deflationary threat on a par with that of Japan.
In a teleconference for inv-estors last week, the manager of the Jupiter Merlin funds said the American consumer still faces a range of challenges despite efforts to reduce levels of borrowing and start saving.
He said: “There are, as they say, green shoots - pending home sales in the States have seen a trend upwards, manufacturing and production has gone up which tends to be a leading indicator, residential property has bottomed out although commercial property has not turned around yet. Is this sustainable or merely a result of the stimulus put in? The consumer is still under considerable pressure from over-leverage and unemployment. Deflation in the Japanese style is the near-term worry.
On bond prospects, Chatfeild-Roberts said: “It is staggering how much money has been made in corporate bonds this year. Those that started in 2006 to 2007 were less lucky, they have been there for the whole ride.”
“I have no doubt corporate bond markets will remain active in terms of new issues and investors will make a nice income from that corporate debt but my view is that most of the capital gain has been had.”
In recent changes to the Merlin portfolios, Chatfeild-Roberts has moved back into technology stocks for the first time since the dotcom bubble burst in 2000. “This has been an area unloved by investors for a long time but you have companies there with top-line growth, cash on their balance sheets and potentially a Windows 7 upgrade cycle, so we think that is quite interesting.”
The manager has been over-weight in emerging markets, notably Asia, for the whole of this year.
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