Investors should be seeking to maximise their alpha through market neutral or long-short strategies, rather than chasing high yields over the coming years, an investment manager believes.
Montgomery Investment Management chief investment officer, Roger Montgomery, said that while investors needed to have the option of going to cash, he warned against being fully invested in the market, as global interest rates hamper returns.
“It’s the right time to invest in market neutral strategies or long-short strategies, or investing [in a] long-only investment, with a manager that can hold cash,” he said.
Montgomery encouraged investors to “go for core growth and high growth funds” that have an intrinsic value, delivering both capital and income growth… noting that “29 per cent of the sovereign debt markets” have negative interest rates, while recent reports have shown that US junk bonds were at record levels and defaults rates have doubled since 2014.
He added that quantitative easing measures adopted by central banks, aimed at pushing out corporate failures and raise consumption, had “artificially raised consumption”.
