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7IM looks to next year for a turn-round in markets

Seven Investment Management is boosting cash levels and shifting to euro government bonds to preserve client capital in volatile markets.

Chief executive Tom Sheridan says the firm is continuing to take a cautious approach to equities despite a possible upturn.

He says: “Although we can expect a strong equity rally in the continuing bear market, particularly after the recent sell-off, both the timing and extent of this would prove difficult to predict and take part in. The outlook for glo- bal growth remains subdued.

“The extremes of volatility of recent days suggest that we should wait until mark- ets have calmed somewhat and to benefit from any near-term rally without substantially changing our defensive posture.”

Sheridan says stockmarkets often rise in recessions as they have already factored in bad news by the time the economic statistics decay.

He says: “Sometimes, stocks are still falling dur- ing the early stages of a recession but often they have star- ted to recover even as the recession begins. Woe betide the investor who was too defensive going into these rapid turn-rounds in market fortunes.”

Nevertheless, 7IM is withdrawing money from the markets by cutting certain alternative assets and is maintaining a low level of equity exposure to strengthen cash positions.

Sheridan says volatility will continue until bank issues settle but those with long-term money held in cash should dripfeed it into the market in the next six to nine months.

He says: “2009 is very lik- ely to be one of those times that many will look back upon in five or 10 years andlament the fact that they did not invest.”

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