By Scott Ronalds

In his latest interview with Independent Investor (a U.K. publication), Sandy Nairn, the CEO of Edinburgh Partners (the manager of our Global Equity Fund), provided his views on the global economy and capital markets. After being cautious in late 2007 and bullish in early 2009, Sandy sits more in neutral territory today. He sums up his outlook for investors as follows:

“I’m not massively depressed about the outlook. But nor am I massively excited either... Returns from equities are likely to be lower and volatility greater than in the past, but the long-term outcome for equities remains a positive one, both absolutely and relative to other asset classes. In other words: get rich slowly!”

As for how Edinburgh Partners is positioning the Global Equity Fund:

  • “We expect to retain substantial holdings in the U.S., but as with other developed economies, unless valuations fall meaningfully from here, it is unlikely we will have much exposure to those sectors of the economy which are exposed to falls in Government expenditure and direct consumer purchases.”
  • “We are still finding European stocks worth buying. Europe is very much a region of contrasts. The largest economies are not in bad shape, even though both Italy and Spain do need fiscal retrenchment. It is in the periphery that the issues reside and it is important to keep in context the relative sizes of each.”
  • “The one area where we’ve made a significant increase recently is in Japan, where we’ve gone from having 4% of our global portfolio to more than 15%. The percentage could easily go up further.”

The piece expands on Edinburgh Partners’ rationale for Japan, and touches on a number of issues that are top of mind for global equity investors today – namely, the Greece/euro situation, the outlook for China, the recovery in the U.S., opportunities and obstacles in Europe, and banking reform.

If a ‘staycation’ is in the cards this summer, click here to download the full article. Sandy will take you around the world.