Posted on 22 Apr 2009
The world economic outlook remains cautious with recent improving economic data, coupled with the accompanying stockmarket rallies, only pointing to “tentative evidence” of a sustainable recovery, according to fund managers from the Prudential group.
“The need to replenish fallen stock levels by businesses would lead to a near term improvement in growth and earnings momentum,” said Kelvin Blacklock, chief investment officer of Prudential Asset Management Singapore. “However, this is likely to fade. Only a strong rebound in final demand would enable a sustainable improvement in world growth.”
Blacklock told reporters at a briefing here yesterday that 2009 would be a year of falling asset prices, debt de-leveraging and high unemployment as historical evidence showed that growth and profits would remain “below trend” for several years following a financial crisis.
Investors should look at other asset classes besides equities, such as the bonds of emerging economies such as
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Prudential Fund Management Bhd products and marketing chief officer Christopher Chan said the Prudential Global Market Navigator Fund, a new open-ended fund, offered exposure to a range of global asset classes such as bonds, equities, cash and currencies.
He added that exposure to each of the asset classes would be primarily through exchange traded funds (ETFs), index futures, direct equity and bonds, swaps, options and foreign exchange forwards.
“The key benefit of ETFs is diversification. Since many ETFs track indices which comprise a larger basket of securities compared to mutual funds, they inherently provide instant diversification and are expected to minimise the impact of single stock risks to the entire portfolio,” Chan said.
