Where will the smart money be invested in 2008?
03/01/2008
Forget commercial property, UK smaller companies and UK mid-caps, says
online fund analyst Moneyspider.com in its prognostications for 2008.
Instead, think corporate bonds, emerging markets – notably Russia – and
equity income.
Russia is likely to be one of the top performing markets in 2008. And
corporate bonds are likely to make a major comeback as shares in other
sectors falter.
But it is Russia, with its cheaper stocks and a more open market than
China with an emphasis on commodity stocks – backed by rising oil
prices – that may well reward Isa investors over the coming year,
predicts Moneyspider.com’s Tony Ahearne.
“We anticipate that more of the smarter Isa money will be winging its
way into funds like Neptune Russia and Greater Russia, but it should be
remembered that these are higher risk funds and not for everyone.
“Investors in the commercial property market sector – those who can get
their money out after the example set by Friends Provident, which has
effectively now locked its investors in for the next six months – may
well be looking for a more seductive option.
“Anyone still wondering whether it is worth hanging on to commercial
property should, in our view, seize any opportunity they can to get out
as soon as possible. It is looking like 2008 will continue to be a
difficult year in this sector with little relief in sight.
“But for those investors wanting to play it safer in the forthcoming
Isa season, corporate bonds look likely to make a comeback. Shares have
taken something of a pounding, but if you look at a fund such as
Henderson’s Strategic Bond fund, which has a Moneyspider ‘A’ rating and
has risen by over 40 per cent in the past five years, then bonds would
appear to be a good bet.”
Ahearne adds that the UK smaller companies and also UK mid-caps are
likely to wobble in 2008, given that many firms in these sectors will
be exposed to a slowdown in the domestic economy.
“Energy, oil, mineral, water, gold and alternative eco funds are also
likely to do well in 2008 as there is a strong demand and China and
India in particular are territories likely to continue to prosper.
“Funds operating in these sectors are not for the squeamish, but for
investors looking for a sexier Isa, the natural resources sector looks
like it will continue to flourish.”
“We also anticipate that UK Isa investors will be lured back to equity
income funds, as the bad debts in this sector begin to take on more
transparency. You can bet that the banks – which after all have vast
resources – are going to do everything in their power to turn this
sector around in 2008.
“And as share values have already fallen significantly, there could
well be some bargain buys out there,” he adds.
“Invesco Perpetual High Income had a pretty good year and was one of
the few funds in this sector to make decent money under the guidance of
star manager Neil Woodford. It has to be a hot tip for the forthcoming
Isa season.”
“Emerging markets were the success story of 2007, and we think there is
a lot of steam left in this market for 2008. Investors should never put
all their eggs in one basket, but a five to 10 per cent exposure in
this sector would make for a sensible Isa holding,” says Ahearne.
“The core Moneyspider.com mantra is choose the right fund manager, but
make sure you are in the right fund.
“By maintaining a beady eye on performance not only of the fund and
sector you’re in but also funds and sectors from across the whole
market, Moneyspider.com investors can see where the real profits are to
be made.”
The Moneyspider service, designed to appeal to the ‘average’ investor,
is a comprehensive yet easy-to-understand fund monitoring tool
delivering – at no cost at all to the client - personalised reports,
including valuations and ratings on each investor’s individual fund,
all updated on a daily basis.
Further details on the mechanics of Moneyspider.com can be found at the
link below.