Research by Williams de Broe suggests there are plenty of attractive returns on offer from the zeros...
Research by Williams de Broe suggests there are plenty of attractive returns on offer from the zeros market without investors having to take undue levels of risk.
John Newlands, analyst at the group, said the recent 1,600 point fall in the FTSE 100 over the past 10 weeks has tested the group's faith in zeros to the limit and has also pushed several distressed split caps and their zeros over the edge into a cashless abyss.
As a result of this Newlands said that the best zeros have become cheaper and the worst now look like they will go bust. As for those in between, he said some are striking bargains for risk takers, but others are very exposed. Newlands said: 'To paraphrase the report, the collapse in the prices of poorly constructed split cap fund and their zeros does not alter the fact that investment grade zeros remain one of the finest stock market investments available.
'The events of the last few weeks have, if anything, reinforced this message, especially noting that the chance of any sharp rise in UK interest rates currently appears remote.'
Williams de Broe estimates that the market capitalisation of the zeros subsector has fallen by around £1.9bn since November 2001, from around £4.1bn to around £2.2bn.
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