Global

A wise man once said that the stock market is a very efficient mechanism of transferring money from the impatient to the patient. 2015 could be all about holding our nerve and being patient – and getting used to a lower return environment.

Back in September, I said markets were looking prone to pull-backs. My view has not changed. I believe a number of equity markets, the US in particular, look stretched. However, given the lack of obvious alternatives and a nascent global recovery, equities still look the best option for both capital and income returns. I would also argue that in this less fertile ground for bargains, we are in ideal territory for stock pickers to unearth pockets of value.

I think we would need a major world conflict, or an acute rise in interest rates, to see equities endure more than a technical correction. After years of macro-driven markets, the focus is now on fundamentals – and company performance. Hence I believe the role of active managers will be vital in 2015. The key will be to take position yourself for gains, but keep a close eye on capital preservation.

Chelsea Selection or Elite Rated*: Fundsmith Equity and JOHCM Global Select

*by fundcalibre.com