The Scottish American Investment Trust, otherwise known as Saints, is taking advantage of fair condi...
The Scottish American Investment Trust, otherwise known as Saints, is taking advantage of fair conditions in the bond market to build up potential gearing levels.
The trust raised £35m on 6 December through a bond issue, money that it intends to hold until conditions in equity markets improve.
Fund manager Marcus Brooks said: "Conditions in the bond market are good at the moment; the long end of the gilt market is strong: bringing yields down."
Brooks has worked at Stewart Ivory which has managed the trust for seven years, and became overall manager for the £408m Saints trust in September 1999.
He added: "This means it is a good time to raise long-term money quite cheaply. However, in the short term we do not think this is the right time to invest the money raised in equities."
In the long term we are clearly positive, we expect equities to outperform bonds hence the fundraising. But over the short term we are quite cautious."
Brooks expects the economic situation to clarify over the first two or three months of 2001.
He said: "The markets have been suffering recently from fears over interest rates, which have clearly now peaked if indications from the Greenspan camp are noted.
"The price of oil has started to weaken at last, and US and UK economies are slowing down, putting a stop to fears of inflation."
However, Brooks believes this slowdown is leading some investors to think there might be a recession in the middle of next year. Brooks said that while he is not forecasting a 2001 recession, he is not willing to deplete the trust's cash reserve and will not invest more in equities until the market looks more certain.
Partner Insight Video: Advisers have had to adapt to the changing investment landscape.
Investment trust savings scheme