Irish Life International thinks the equity market currently offers some long-term opportunities for investors
Irish Life International, the providers of the discretionary portfolio service, Maestro, takes the view that the equity market currently poses an opportunity for investors.
With the recent slowdown, global equity markets may be seeing light at the end of the tunnel. Consequently this is the right time for investors to take advant-age of the market, if making any long-term investments.
Shane Buckley, Maestro portfolio manager at Irish Life International, explained that with a multi manager portfolio service, an investor can lower risk and therefore is not affected by the market risk associated with different investment vehicles.
'At Irish Life International, we offer a discretionary portfolio service. An investor has the choice to pick the asset allocation of a fund, the currency and the strategy. We then find the best managers to run the fund with a mixture of styles in order to beat the market. For example, we will pick both growth managers and value managers for a particular strategy, hence balancing the risk of the fund,' he said.
The multi-manager process is a way of diversification by which a selection of independent managers is used to run a fund. Buckley explained: 'The strategies are at the disposal of the investor and we give them the choice for their preferences. We have a range of strategies if the investor wants to move away from equities.'
On the global market, Buckley said: 'We believe equity in the long term is a good buy. Equity markets have performed poorly, but we would expect them to recover over the next year.'
The view is that once the US picks up, the global economy will follow and this is expected to happen late this year continuing in the first half of next year. Buckley has faith in interest rate cuts and as a consequence shows some concern for the Eurozone where the ECB has been reluctant to cut rates.
However, the prospects for the US look good although Buckley explains that rate cuts have a time lag of nine months before taking effect.
Buckley explained: 'In the US corporate earnings from General Electric, Microsoft and Wal-Mart all beat expectations, but their trading outlook suggests that re-acceleration of growth would not happen until late this year or early next year. Upturns in the business cycle lag rate cuts by some nine months signifying that by Q4 2001, we should see economic data starting to improve.'
The recent interest rate cut underlines the commitment of the Fed to keep the US economy growing.
'As we have often noted, the US recovery will be the catalyst to make other economies increase their growth. We continue to place the trough of the US equity market at the beginning of April this year. From peak to trough, the S&P 500 has fallen almost 29% over a one-year period. This is in line with the historical average since 1946,' said Buckley.
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