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Double-Dip Fears 'overdone' As Fund Managers Plough Back Into Uk Shares

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Leading fund managers have staked their reputations, and the fortunes of their clients, on a sustained UK economic recovery by increasing their holdings of shares and reducing their positions in bonds in the past month.

A survey of 11 British institutions showed that the average exposure to equities jumped more than 3 percentage points from a month earlier, while allocations to bonds fell from 25.5pc to 24.2pc. Investors buy shares when they are confident about a company's prospects, while bonds are a more defensive asset class.

The results for August were the first time in five months that fund managers increased their equity holdings, according to research by Reuters. They showed that the average allocation to equities climbed to 49.8pc in August, compared with 46.4pc in July.

Andrew Milligan, head of global strategy at Standard Life Investments, said: "Concerns about a double-dip recession are certainly overblown. Too few investors look at economic history. In reality such events are really rather rare, especially once a private sector recovery has begun."

The move back into equities came despite continued concerns about an economic contraction and the effect that would have on corporate profits and share prices. Last week, Albert Edwards, a strategist at Société Générale, warned of a "bloodbath" in equities and a collapse in 10-year UK gilt yields to below 2pc. Gilt yields fell 0.08 points to 2.84pc yesterday.

Jeremy Beckwith, chief investment officer at Kleinwort Benson, was among those that remain cautious. "A double-dip recession is unlikely this year, but recovery has clearly peaked and growth is now slowing," he said. "Stay invested in bonds, and underweighted in equities until policymakers resume quantitative easing. Stay long gold to benefit from money printing."

Some fund managers like the blue chip index because it gives them exposure to overseas income. About 80pc of FTSE 100 profits are generated abroad.

Are these the same fund managers that get paid huge sums of money even if they lose money? So no matter the outcome they get a big fat cheque? No risk there then?

Can someone please tell me where this private sector recovery is? So far all I've read is that GDP is up because of govt deficit spending. What have we missed?

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especially once a private sector recovery has begun."

& luckily Britain's wonderful financial services 'engine' is private sector, thus it all becomes self-fulfilling & ....... err

what could possibly go wrong? :blink:

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Same in MoneyWeek latest issue, they had a whole group of them all saying "fill your boots with UK equities, cos the recovery is here!" What nonsense.

The debt/consumption model for "growth" is over. As the great Schiff said we need to save for investment and produce things. And for those that say we can't compete with Asia, we slap tariffs on these goods that are made in labour camps, spewing crap into the environment. £20 for a DVD player? That's immoral.

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There was an article in Moneyweek this week pointing out that funds managers are getting a flood of cash now from cash savers trying to keep their heads above inflation via shares.

So, if this is true, then shares are being held up by this cash rather than by any true economic fundamentals on the performance of many companies let alone the economy.

You could argue that this is the trap that the BOE and Fed want - suck in the cash from savers then 'kill' the markets allowing the banks to generate massive profits by shorting huge falls in the DOW/FTSE?

TMT in paranoid mode.

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  • 416 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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