F&C chief says uncertain market suits stockpickers

27 May 2010 | By Hannah Stodell

F&C head of UK equities Peter Lees says the uncertainty created by the sovereign debt crisis and the political sit-uation in the UK provides great opportunities for stockpicking.

Speaking at a press roun table in London last week on the UK economy, Lees said political risk has increased but in the international earnings world of economic recovery, the UK remains one of the best stockmarkets to be in. He said he will look to use Ucits III derivatives strategies as a risk tool in F&C’s UK equity fund to counteract volatile markets.

He said: “If we anticipate life getting more difficult again, which we are beginning to at the moment, it makes sense to write some protection.

We are getting a situation imposed on us where we have got interesting politics in the UK and the sovereign debt crisis and markets hate this uncertainty. As a stockpicker, this presents exciting opportunities as good companies should still be able to differentiate themselves very well but what is not OK is the regulators and politicians doing what they are doing.”

Lees said that strategies could include investment in private companies in the resources sector or future options against vulnerable sectors.

He said: “The fallback we have had over the past month is considerably sharper than other cycles. If politicians and regulators are imposing their will in an emotional way on the market, if the bond markets fall again, the equity risk premium has to rise and therefore the valuation of equities has to come down.”

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