Columbia Threadneedle's Bell agreed that government bonds look “attractive” as an investment right now, but outside of that he favours European and UK equities ahead of the US.
This is because he is skeptical about the potential for US companies to hit the earnings forecasts currently expected by markets, while also being quite expensively priced.
He also said that with the US more likely to have a recession than either the UK or the Eurozone, there is a “possibility” that interest rates will rise higher in the UK and Europe than they will in the US.
In his opinion, this would lead to relative weakness for the dollar, which dents the returns achieved by an investor in the UK who owns US equities or bonds.
So while there is a view that the UK economy could be a laggard, its equity and bond markets could be better performers, which could help improve investor confidence over the coming months.
david.thorpe@ft.com
