Offshore Asset Management
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Written by tolumi
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Friday, 05 December 2008 11:23 |
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Offshore Asset Management Probably the gloomiest - or most realistic, depending on how you look at it - of our asset managers remains the Bank of Bermuda. The US, BoB believes, looks particularly grim. “The outlook for corporate profits continues to diminish,” the bank’s investment report says. “With layoffs well underway in the economy and consumers trying to manage large debt balances, any type of relief in terms of lower interest rates will be allocated to debt reduction and savings.” Similarly, in Europe, the Bermudan bank expresses concern over the signals the central bank is sending out.
“Markets are confused by the ECB, which sends out opaque signals about its intention to cut interest rates. ECB officials prefer to talk about price stability, rather than addressing the inflation rate,” the report says.
In the UK, BoB expects consumers to reduce spending, partly because of the
economic contagion emanating from the US. Offshore Asset Management & Lower Interest Rates “The prospect of lower interest rates is positive for equities. But with the FTSE 100 having broken down through the 6000 level for the first time since October 1999, we will be monitoring markets for signs of any pressure caused by weaker news flow.” Ashburton’s global investment strategist, Peter Lucas, believes that the turmoil in the world’s leading equities may prove good news for steely-nerved investors. “We’ve seen a degree of panic that has created an opportunity. If anything, maybe we will be discussing the possibility of increasing up to our maximum equities rating of 50 per cent. We are currently at around 37-38 per cent, and we are fairly comfortable with that. Offshore Asset Management - Short Term “In the short term, though, we don’t rule out the possibility of another retesting of the [equities markets] lows. But recent confidence figures further confirm that the US economy is not ready to lay down and die just yet.” Bonds, on the other hand, appear to have plateaued in value, according to Lucas. He argues that bonds have shown an inverse correlation to equities over recent years and, as such, are likely to fall when equities eventually rise again.
Lucas also believes that emerging markets could prove attractive if, as he believes, the US economy is merely pausing for breath, as opposed to sinking. Please note two changes to these asset allocation figures. First, we are delighted that Collins Stewart Asset Management has agreed to become one of our panel of asset managers. The Guernsey-based firm replaces Newton, which, due to restructuring of its services, will no longer provide asset allocation figures.
Next, Brewin Dolphin’s asset allocation model will now become the Brewin Dolphin Capital Growth model that is offered by the asset manager’s Jersey operation. For this reason, readers will notice significant changes to the company’s asset weightings. 
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Last Updated on Tuesday, 06 January 2009 13:46 |
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