OakTree's Brady says he is bearish on 2014
Ian Brady, founder of Oak Tree Wealth Management Ltd, took 9% off Asia and emerging market exposures before the European and US equities slumped in May. However, he is wary about taking risk in credit and property, according to Citywire.
Brady holds a 3% exposure to Invesco Perpetual European Equity Income fund and a 12% allocation to Newton Higher Income fund. He is presently playing Japanese equities momentum. He added 15% in late 2012 before he took some profits in the summer, the report said.
The Oak Tree chief investment officer increased his allocation to 7% through the Neptune Japan Opportunities fund, Invesco Perpetual Japan, and Hambro Japan fund, the report detailed.
Brady owns 40% of the portfolio in sterling-based assets, but he is concerned about high yielding firms that don't necessary offer additional growth. He also said that at current valuations, equities in the UK are still vulnerable to "earnings disappointments." The Oak Tree founder prefers tobacco stocks and selected capital goods and pharmaceutical firms that can gain margins and benefit from the growth of business expenditure, the report explained.
In fixed income, Brady has transferred his exposure to short duration credit-sensitive bonds through the TwentyFour Monument Bond fund and the Cazenove Strategic Bond fund. The portfolio posted a 20.87% return over the last year, the report added.
Aside from his play on the Japanese rally, Brady cited his early exit from Asia as the main performance driver. He said Neptune Japan Opportunities, Invesco Perpetual European Equity Income and JO Hambro UK Equity Income funds mainly drove the profit, the report stated.
Brady is bearish on the next 12 months, saying 2014 is the "end of the party." He believes performance will be more difficult to achieve this year, Citywire reported.
Ian Brady warned: "Any rise in 2014 will not be as high as the past two years. Valuations are no longer there but momentum has improved- and anything could happen."