Current extreme market volatility should be seen as an opportunity rather than an excuse to become more defensive, according to Anthony Bolton.
Asian and emerging markets will currently look oversold versus developed markets due to their much stronger economies and lower debt levels.
It is Bolton’s view that this provides opportunities for investors with a greater risk appetite.
"I believe the recent stock market volatility reflects a familiar pattern during this bull market of short, but often very sharp, set-backs within a bull trend,” he says.
“For some time I have argued the outlook for the US and particularly Europe is for growth but well below normal growth rates. In my view this makes the case for exposure to developing markets - and particularly those of Asia - even more compelling where growth rates by comparison, even though they are slowing, will still be very attractive.”
Fidelity International accepts that while savers will be nervous about investing in markets for growth, they still need to search for higher levels of income.
It believes equities and high quality corporate bonds can provide income now.
Dominic Rossi, Global CIO Equities, argues “even if equity markets are showing volatility in growth, equity funds can provide a good alternative source of income."
And Andrew Wells Global CIO Fixed Income, points out that many corporate issuers are now rated as lower risk than national governments.
“In recent years, companies have been taking the steps that governments should have been taking in paying off their debt. We now have a good range of companies who can service their debts and with interest rates likely to stay lower for longer, this will be positive for total returns from corporate bonds."
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