What do you believe will be the most surprising sectors of 2016?

david-daglio We like the Financials sector, and we maintain an overweight exposure to regional US banks, which have been overlooked by the wider market. We see particular opportunity among small- and mid-sized banks with clean balance sheets and the ability to increase margins on their lending should US interest rates go up. Rising US house prices are also a positive for this sector, given increased mortgage lending.

In Healthcare, meanwhile, companies with a pipeline of remedies for globally significant diseases such as Alzheimer's could be game-changing. The sector has come under political pressure in recent months in response to media reports of excessive pricing, but we expect this to be a short-term phenomenon, as the US Food and Drug Administration wants companies to innovate.

While we often adopt a contrarian investment stance on most areas of the market, we remain very cautious on investments in the US energy sector. It is worth remembering also that debt holders in this sector are paid first, the equity holders get paid last, and for equity valuations to improve significantly, higher oil prices are required. Our fear is that the shale energy sector may be a potential house of cards.

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