Devaluation of pound would allow UK economy to build new export industries

ABSOLUTE RETURNS

Sterling has been a key contributor to our fund's performance, and although we have a fairly neutral view on sterling going into the election, we believe whatever the new government's colour, it will be difficult for them to cut the budget deficit in a timely fashion.

The advantage the UK has over its European neighbours is the pound can devalue. A devaluation of the pound would allow the economy to build new export industries, and probably would not be fought by the political or economic authorities. 2009 was the year for credit and many investors chose to implement a view on risky assets via credit markets. This has played out in our view and valuation no longer supports another year of such stellar returns. Credit still, however, presents some great opportunities beneath the index level. We have been able to take a view on sovereign risk via differ...