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Prudential sees value in equities and credit despite ‘dramatic slowdown’

The UK recession will be “dramatic” but value being seen in equities and credit offer investors a “once in a generation” opportunity, says Prudential Portfolio Management Group director Martin Brookes.

Prudential’s PMG are the in-house investment strategists and ‘manager of managers’ for the firm. Brookes and his team are responsible for interpreting the output from Prudential’s multi asset funds, and then managing the day to day investment strategy and asset mix to ensure it stays in sync with the firm’s overall strategy.

Despite the onset of a “dramatic recession”, Brookes is injecting more risk into funds, buying into equities and taking more credit risk within Prudential’s fixed income portfolio.

He says: “The UK is weakening very dramatically but given the policy tools and the stimulus that is going on our expectation is that you’re looking at 12-18 months to see a gradual recovery.

“When things are so volatile, a lot of mistakes are made in investing and people associate bad economic news with bad news about prices which is a dangerous link to make. There’s a lot of distressed forced-selling at the moment and consequently the valuations in both equity and credit looks extraordinary.”

Brookes favours large cap stocks in the UK and Europe where liquidity is at its strongest. He says: “The UK is going to be particularly hard hit in this slowdown because of its exposure to financial services and housing. So when investing in the FTSE 100, my tendency would be to stay out of small-mid caps stocks with a high domestic, retail and consumer orientation.”


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