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Equity investors warned not to sell too soon

Financial riskDespite fears of a fall in equity prices, investors must be careful not to throw their hand in too soon and risk missing out on potential benefits, warns Investec Asset Management.

Global risks are continuing to mount – from US President Donald Trump’s trade war to interest rate hikes from the Federal Reserve – putting pressure on other regions.

But, despite a slowdown in economic growth, the risk of a recession in 2019 is relatively low, said the asset manager.

“Despite the uncertainty, we believe options currently offer a very cheap way to build defensive exposure into portfolios – seeking to capture the upside in equities and other assets without the downside, and thereby creating a positive skew to performance,” said John Stopford, a portfolio manager at Investec Diversified Income & Global Multi Asset Income Strategies.

He added that, “whilst broadly speaking emerging markets have been badly hit, we are identifying some very interesting individual opportunities with resilient fundamentals at attractive prices”.

Stopford said his preferred major currency was the Japanese yen, which he believed was cheap and offered defensive portfolio characteristics. In contrast, “the outlook for the dollar remains uncertain”.

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