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Asset allocators split on how best to ride out recession fears

Asset allocators split on how best to ride out recession fears

Investors are split over how to handle growing deflationary fears, with a number aggressively trawling hard-hit areas for opportunities, while others are sticking to their guns.

That is according to the result of a poll carried out by Citywire Selector this week, which gauged asset allocators’ sentiment against the backdrop of an uncertain macro environment.

In response to a question on how they were responding, 24% said they are aggressively adding to areas other investors are fleeing, while the same number said they are investing as usual.

Division was evident among the other options, which investors evenly split between becoming more defensive and cutting risk, simply upping cash and those who do not believe a recession will happen at all. Each option received 17% of the vote, respectively.

The question was posed in the wake of the global markets' sell-off in January, which was coupled with low commodities prices and questions over whether the Federal Reserve would achieve further rate hikes this year in the current environment. 

Fund managers such as Martin Skanberg said he is adding energy positions to ride the panic wave in the sector, while Citywire AAA-rated David Robinson is also looking at the tarnished sector for quality names at cheap valuations. 

Elsewhere, Citywire AA-rated Sander Bus said a potential US recession is already priced into current credit spreads, although he doesn’t expect it to happen.

Meanwhile bond veteran Bill Gross from Janus Capital in a Tweet through the firm’s official Twitter account encouraged investors to hold cash in reserve amid a potential ‘global margin call’.

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