Kleinwort Benson CIO eyes opportunites in 2009
The chief investment officer of Kleinwort Benson, the UK private banking arm of Dresdner Kleinwort, believes 2009 will bring opportunities for investors willing to take risks, but for most fear will prevail and the top priority will be security.
Jeremy Beckwith, CIO of the bank which was recently bought by rival Commerzbank, said: “As the year begins financial security will be the number one priority. The financial markets in 2009 are expected to be flat to gently higher while the economies of the major nations catch up with the dramatic market movements that have taken place in recent months."
He added: “Investors will not see the returns that they are used to and for this lower return they will demand absolute security of their initial investments. For those that are in a position to take risk, bargains can be found in the riskier asset classes which remain cheaply priced on a long term view."
Beckwith likes equities and corporate credit and thinks they are well valued, offer high yields and the markets are already discounting a serious recession in this asset group.
Property is harder to call - there will be few buyers of property next year and Becwith believes will only be attractive to long term investors with little prospect of any increase in value.
He said if the hedge fund industry is not deluged by a wave of redemptions following the Madoff scandal in the first quarter of 2009, there will be opportunities for investors due to the current dislocation and lack of liquidity in many financial markets.
He added that commodities should become attractive later in the year as the emerging world economies recover quicker than Western economies, stimulating a greater demand for the asset class.
Also, Beckwith believes structured products that take advantage of current levels of implied volatility to offer a high income whilst limiting downside risk will become increasingly popular, particularly for those investors who are suffering as a result of falling interest rates.
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