Jane, who manages over £800m as head of multi-asset funds for M&G, says value is emerging in sectors which have very unattractive short-term fundamentals.
He says: “For all the noise this year, property is actually one of the better performing asset classes. Looking ahead, we have clearly got a lot of negative profit surprises to emerge from the corporate sector in the West and a lot more hard work to get through in the banking sector. The question is to what degree is this reflected in the price and that is a hard judgement to make.”
Jane intends to make this judgement call in the next six to eight months, saying: “Up until now, we have concentrated on things going up but now is the time to diversify.”
Forestry is another attractive area for the fund due to the public’s growing interest in green issues but Jane says its main attraction lies in its lack of correlation to other asset classes.
Despite a strong run in the emerging markets, Jane acknowledges that Asia could be vulnerable to a growth slowdown. He says: “We need to consider that after the Olympics, there could be a decline in China’s growth rate. So far, we have not seen any evidence of this but wage inflation could have an impact on the country’s ability to grow the economy in the short to medium term.”
Looking ahead, Jane says infrastructure will take centre stage. He says: “In the next 20 to 30 years, the focus for the world economy will shift away from Western consumption to infrastructure.”