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View the article online at http://citywire.co.uk/wealth-manager/article/a647479

FTSE creeps towards 6,000 in tepid Santa rally

by Dylan Lobo on Dec 24, 2012 at 12:54

'The good news here is that I have been able to find plenty of undervalued companies in different parts of the market. Some of these are distressed situations, but some of them are good quality businesses that the market has just ignored,' Wright said.

“Additionally, I think the conditions are perfect for M&A activity, with record low interest rates, strong corporate balance sheets in large caps, bargain valuations in small caps, and the economic environment rewarding those organisations that can operate at maximum scale and efficiency.'

James Griffin, manager of the Fidelity Moneybuilder Growth fund, echoed this sentiment: 'The overall economic environment is likely to be relatively benign for equities in 2013 as policymakers continue their ‘muddle through’ approach. I would see such volatility as an opportunity to add to positions,' Griffin said.

'Equities remain exceptionally cheap and under-owned versus other asset classes, so there is potential for solid gains to be made in 2013. However, recent mixed corporate results have demonstrated that it will not be plain sailing for equities and I am particularly cautious on industrials where revenues have been coming under significant pressure.

'I believe stock picking is key in this low-growth environment – this means identifying the companies that will take market share and grow their businesses. Companies that are attractive include those with the balance strength to access funding markets and invest for growth through R&D and marketing.'

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