Double-dip recession predictions may be overblown as fund managers increase share holdings and cut back on bonds


Chances of a double-dip recession may have been overblown if the actions of leading fund managers are to be believed. Managers are hoping for a sustained economic recovery and have increased their share holdings and cut back on bonds illustrating their confidence in the market.

A Reuters poll of 11 British institutions found that the average allocation to equities rose from 46.4 per cent in July to 49.8 per cent in August and bonds fell from 25.5 per cent to 24.2 per cent. The UK is one of the few countries to see an increase – US and European investors reduced their equities.

Head of global strategy at Standard Life Investments Andrew Milligan said: “Concerns about a double-dip recession are certainly overblown. Too few investors look at economic history. In reality such events are really rather rare, especially once a private sector recovery has begun”.

However, there are some experts who are still wary of the economic slow-down and are sticking to cautious money management strategies.

Jeremy Beckwith, chief investment officer at Kleinwort Benson said: “A double-dip recession is unlikely this year, but recovery has clearly peaked and growth is now slowing. Stay invested in bonds, and underweighted in equities until policymakers resume quantitative easing. Stay long gold to benefit from money printing”.