As with rival Winterflood, Numis Securities’ half-year review of its New Year investment trust recommendations is set against a backdrop of overall good performance, particularly from Europe, technology and UK smaller company funds, coupled with anxiety that toppy markets could make a sudden retreat.
‘With equity markets at record highs following an eight-year bull market, we remain wary about the potential for a correction at some stage during 2017,’ writes Charles Cade, head of investment companies research at Numis.
‘However, valuations do not appear to be in bubble territory, as investor sentiment is far from euphoric. In addition, economic growth prospects are improving (outside the UK) with global GDP growth of 3.4% and 3.6% predicted for 2017 and 2018, respectively, according to the IMF.’
While understanding some investors’ wish to take money off the table, Cade says his team’s preference is to favour investment companies under experienced active managers who take a long-term investment approach, rather than look over their shoulders at their stock market index benchmarks.
Numis has made two changes to its equity trust recommendations and seven to its favourites in ‘alternative assets’. Here it says it is increasingly hard to find good value trusts with many income-producing funds trading on high premiums above net asset value (NAV).
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