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Julian Gibbs

I gave a talk at a conference organised by Future Value Consultants on the Friday after the terrorist attacks in the US and advised my audience to buy equity unit trusts immediately. Since then, nearly all sectors have risen – some, such as technology and telecoms, by considerable amounts.
Stockmarkets usually behave in a similar way. They rise too far, too fast – for example, during the technology bubble some 18 months ago – and also fall too far, too fast, such as they did after September 11.
Some trusts have performed extraordinarily well since then and I am glad to say that most IFAs to whom I have spoken have sensibly advised their clients to stay put although only a small minority have advised them to buy.
Most markets are still a good buy as the majority are still 20 per cent or more off their highs, with the strange exception of the Russian stockmarket, which is up by 60 per cent since the beginning of the year in dollar terms, and South Korea, which is up by nearly 20 per cent.
So which sectors should equity investors buy now? I believe that well-managed European smaller companies funds are a prime buy because many companies are still undervalued and, over time, the euro is bound to strengthen against the pound. Some of the best trusts have more than halved in value in the past year and now present excellent buying opportunities.
Some good trusts include those run by Aegon, Henderson and JPMF. For those who want to take a big punt, Aberdeen European technology could be exciting.
Often, last year’ worst performing sectors are this year’ best. Other sectors which are undervalued include UK smaller companies and North American smaller companies.

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