The sustainability of any strength following the mid September bounce seems unwarranted on fund...
The sustainability of any strength following the mid September bounce seems unwarranted on fundamental grounds says Carl Stick, manager of the Rathbone Income Fund.
With this in mind, Stick is adopting a defensive stance. He argues that the risk to earnings seems to be on the downside and sees a heightened possibility of further external shocks to confidence, whether through further terrorist attacks, an escalation of the conflict in Afghanistan, or increased tension in the Middle East.
Stick's long term strategy is to maintain a well balanced portfolio but his current bias is towards the more defensive end of the market. Stick is consolidating core holdings within the Utility sector and new exposure has been created in the UK Food Retail and Transport sectors with the emphasis being on UK defensive earnings.
Stick commented: "The consensus view is that a US led recession has been brought forward; however it will be deeper but will bounce back faster than expected. If we adopt this view, we will look to switch the bias into more cyclical and growth oriented earnings towards the end of the current year and moving into the first half of next year."
Stick's Rathbone Income Fund is currently top decile over 6 months, 1 year, 3 years and 5 years.
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