17 Jan, 2008
Published: 08:23 Thursday 17 January
2008 By: David Campbell, Investment Reporter
expected dollar rally during 2008 will be put on hold as the Fed
aggressively cuts rates, David Jane, manager of the M&G
Cautious Multi Asset fund has predicted.
'Everyone is worried about inflation and that the US has devalued
dollar - the key will be to keep it down,' said Citywire AAA-rated
'If you read what Bernanke has written, he focuses on periods of
history where the US did not do right things and Japan where they
didn't cut rates far or quick enough.'
Despite all hands being thrown to the pumps on interest rates, he
recommended 'wet weather gear all round' for the markets and said
they were 'not out of the woods yet'.
'The extraordinary growth of recent years - largely due to huge
leverage in the US - has come to an end but has produced this great
growth in the east,' said Jane.
'We are starting to see that the US slowdown affects global growth.
We need to worry about that and what we do about that. Materials
indices are weakening and gold is rising.'
Over the next year he said that he was favouring mega-cap equities,
some leveraged loan products and government-issued bonds, all with
an emphasis on developed markets.
He added that defensive trading was currently very expensive but
that there were still opportunities in agriculture, resources and
in particular oil.
Having trimmed his exposure in the fund earlier in the year he said
that he expected to take advantage of opportunity buys to restore
property to its 'natural level' of 10% by 2009.
The fund has struggled in the first year of its existence,
returning 1.22% on investment versus a LCI Mixed Asset benchmark of
6.9% over that period.