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Husselbee still favours equities

North Investment Partners chief executive John Husselbee will not reduce the equity exposure in his City Financial funds of funds despite expectations that market volatility will continue.

Husselbee says fear is driving the market and he believes it is best to remain in equities as bonds still look unattractive in comparison.

He says bond yields in the US are less than inflation and he thinks this is not sustainable in investment terms.

Cash is building up in the City Financial funds through new money and Husselbee says he will use this for buying opportunities that have been brought about by increased market volatility. He says he has recently invested money back into his favoured themes of emerging markets and resources.

Husselbee says: “The question is, are we seeing a relief rally in a bear market or will things muster on so that we will see a return to equities? My view is more the latter than the former. When we see the climactic behaviour we saw recently, we must buy low and sell high.

“Things were a lot cheaper last week and could get cheaper. On a five to 10-year view, there is lot of value around but fund managers are not always given the time, they have to perform over short time periods.”

Husselbee is also interested in structured products based on auto-calls – the technical term for the kick-out structure.

He is looking at a product offering 12 per cent return after a year if the FTSE 100 finishes no more than 20 points below its starting value.

He says: “When fear is driving the market, pricing of these products is attractive.”

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