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Seven questions for Eden's Mark Harris

by Mark Harris on Apr 04, 2012 at 00:01

Seven questions for Eden's Mark Harris

Eden Financial’s Mark Harris is watching for a pre-US election dip and believes the Chinese equity market has potential to surprise on the upside.

How has your asset allocation changed over the past three months?

We started the new year bullish and have been suitably rewarded. Over the past month, we have started to raise cash in the CF Eden Global Multi Strategy fund on worries that markets had got ahead of themselves, with sentiment extremely positive. The fund’s equity weighting is now at 35%, with 24% in alternatives, 26% in fixed interest and the balance in cash.

What have been your latest allocation calls?

Reducing risk has been our most recent theme. In the short term, if there is a setback in risk assets there is likely to be a rally in fixed income markets. However, we would look to sell on this, reducing investment grade exposure and potentially shorting gilts.

Where are you seeing opportunities from a valuation perspective?

I am optimistic about equity markets, but with some reservations. I want to buy. As the run has drawn on, though, prices have become slightly stretched. If the market corrects by 5% to 8%, I would see this as a buying opportunity.

One trigger could be a pre-US election dip in markets between now and the summer. Buying on the dips is sound advice, in particular increasing exposure to the US and emerging markets.

The fact that central banks are squarely behind risk assets across the globe for the foreseeable future supports this case.

In the UK, some retail names and mid-cap oils on a stock-specific basis look attractive. These have a stronger correlation to the oil price than the more diversified oil mega-caps, such as BP and Shell.

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