Hawksmoor Investment Management is spotting opportunities in sectors that are currently performing badly such as emerging market debt and corporate bonds.
The multi-manager says holding cash and government bonds is currently unattractive because their value will be eroded by inflation. The alternative is to look for corporate bonds and equities where prices have fallen so that investors will benefit from any appreciation in the value of cheap assets.
It is possible to buy equities and bonds from companies with robust business and strong finances that should deliver better returns than gilts and cash. But Hawksmoor highlights the problem for investors of being pulled between attractive bottom-up opportunities and unattractive top-down political and economic concerns.
Chief investment officer Richard Scott says: “Historically, the best times to invest have been when it has felt hardest to do so.
Investors need to decide to what extent they are prepared to swap the almost certain losses, after inflation, of holding cash and core government bonds for the potentially much greater returns offered by carefully chosen equities and corporate bonds.”