PSigma's Tom Becket has identified a number of funds he believes will be well positioned to optimise on the recovery when it comes.
The Balanced Managed fund of funds manager says he is adopting a 70/30% approach to investing with 70% in less risky assets such as bonds, and blue-chip equities while 30% of the fund will be in 'recovery' assets.
Becket identifies River and Mercantile Long Term UK Equity Recovery as a fund positioned to benefit from long-term amelioration improvement in equity markets.
"The fund is invested in companies where the market has lost favour in the company, but which have the ability to survive the downturn," says Becket.
"Similarly, we believe that Lazard's Global Equity Income can perform a similar task in international markets, whilst also providing a healthy yield in the region of 7%."
Becket's corporate bond exposure includes the defensive Pimco Investment Grade Credit fund and the higher-risk Artemis Strategic Bond fund.
"The Artemis vehicle is specifically targeting distressed issues in the expectation of high longer term rewards," he says.
"Some of our 'recovery' trades are much simpler. We believe that the oil price at around $40 is unsustainable over the longer term, so we have brought the ETF Securities ETF.
"We argue that the longer the oil price remains subdued, the higher the potential long term return, as companies rein back in exploration and lay off specialist staff, creating a supply shock further down the road."
He adds it is hard to dispute the immediate future is anything but bleak, but he has hope a combination of the factors mentioned should bring a recovery from this crisis before too long.
