The Cazenove multi-manager team at Schroders has warned stockmarkets “need the froth blowing off them” and admits they are finding it difficult to locate any managers bearish enough for their views.
Speaking at a Schroders conference in New York last week, Cazenove multi-manager team head Marcus Brookes noted global equity markets, especially the US, are looking “a little bit stretched” after posting gains for 2010, 2011, 2012 and, if the year to date trend persists, 2013.
He said: “Sentiment towards equities already appears to be pretty strong and it could be we get a 1999-type levitation of the equity market because there’s oodles of cash washing about.
“I would just caution that everyone is feeling pretty happy about the world and they have just made quite a lot of money … this means some markets probably need the froth blowing off them.”
Brookes added the early months of 2014 have several flashpoints that could halt the progress of equity markets as well as traditionally “safe” assets. These include US debt ceiling negotiations, the onset of tapering and European parliamentary elections.
He said: “I do generally think it is now very rare to find a manager predicting a negative return for 2014 or 2015. If you find a bearish manager, let me know.”
Brookes manages the Diversity range at Schroders, which includes the £1.3bn Cazenove Multi Manager Diversity fund.
Equilibrium Asset Management investment manager Mike Deverell says: “We are being quite cautious right now and may well move underweight equities. But we would not go strongly underweight because there is no evidence to suggest markets will move down a long way – they just won’t move up as fast.”
Gary Jackson was in New York as part of a media trip organised and paid for by Schroders