Shorting silver and buying up Asian debt are smart moves, maintains RMG partner and former Wealth Manager cover star David Man (pictured), who is also backing the Canadian dollar and the Norwegian krone
The portfolio has a 4% position in commodities – the bulk of which is a short against silver – and while the play has been tricky since the start of 2012, David Man maintains the call will pay off.
‘Our view is that as we see a cyclical slowdown in the global economy, silver will struggle. We have made money but it has been tough over the last two months because of the reaction to gold,’ he said. ‘Silver has gone up on the back of gold’s rise but we are pretty happy with it in general.’
Gold, meanwhile, is yet to feature in the portfolio despite much recent pro-gold sentiment.
‘One glaring omission we have is gold. We have never really invested in gold and at some stage in 2012 we would like to be buying some gold. But we don’t like the entry point so we would look for it to correct and then buy.’
One boost to performance over the last year came from shorting Spain.
‘Spain is hugely reliant on two areas, construction and banking, and at the time both were looking particularly vulnerable,’ Man said. ‘I wouldn’t say that now; there are other markets that look more vulnerable.’
Asian debt also features prominently in the portfolio and Man says he would ‘like to hold it for years’.
He added: ‘We are buying it for two reasons; the yield and the currency appreciation. Clearly those currencies are going to appreciate because of markets.’
High yield is one area Man feels he ‘missed the boat on’, adding: ‘The easy money has been made in high yield.’
This year Man is going by the strapline: ‘Buy the hysteria and sell the euphoria’ – a strategy that saw the portfolio take up more short positions recently: ‘At the moment we have gone more short than we were because we think we are in the euphoria,’ he said.
Shorting currencies is also likely to be prominent on the list of plays this year: ‘As a strategy we believe that those central banks that are printing – which is the European Central Bank printing through the back door, the Bank of England, Switzerland and Japan – those currencies should weaken.
‘And against, we would say that we want those currencies that aren’t printing, which is the US dollar and those countries that have the greatest means domestically to ride those storms, such as the Canadian dollar and the Norwegian krone.’