Selectivity key to better returns as corporate profits signal recovery

ASSET ALLOCATION

Earlier this year, we advocated an active approach to investment rather than a passive strategy of buying markets, which we felt was unlikely to reward investors.

This translated to discriminating between stocks within sectors and between countries within regions on the grounds recovery and progress would be piecemeal. Halfway through 2010, that advice still holds as it is difficult to get a clear steer on where we are headed when looking at financial markets in general. The various asset classes are signalling very different outcomes. Government bond markets are focused on signs of deceleration in the world economy, although deflation rather than ‘double-dip’ appears to be the concern. Safety trades have featured in many markets – for example, tr...