Georgina Hellyer, manager of the Threadneedle Columbia GEM Equity Fund, agreed with Ballard’s analysis. “A shorter, sharper clean-up would be better, but that’s not likely to happen in a one-party state like China,” she said. Like Ballard, she sees plenty of reasons to be wary about China. “China’s reserves might be very high, but compared to the size of the economy they are not that high,” she said. “And you have to take into account that every Chinese can expatriate $50,000 a year.” But what about all these Chinese companies which now look comparably cheap after the recent sell-off? “P/E-ratios are pretty irrelevant as long as you don’t know what the E in these ratios is going to do,” Hellyer said drily.
Inertion all around
So how are Sweden’s fund buyers actually preparing for such a correction? The answer is that they actually not doing much at all. They are either already underweight the most risky areas, such as emerging markets, or they simply don’t know what to do considering bonds are not anymore the safe haven they once were, and trust in absolute return products is not as high as elsewhere in Europe.
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The status quo is the the preferred option for all but one asset class: European equities. Sweden’s fund buyers seem to believe that this asset class is somehow shielded from market turmoil, at least to a larger extent than other areas. This is probably due to a staunch belief in the supernatural qualities of Mario Draghi and the ECB.
Click here to see a full overview of the voting results at Expert Investor Stockholm.
And click here to view a slideshow of photos taken at the event.
