PSigma’s Becket: FTSE could rise to 5,800 by year end

PSigma’s Tom Becket believes the FTSE 100 could rise 10% by the end of year as European policymakers look set to recapitalise the Continent's highly indebted banks, boosting investor sentiment.

Becket believes the excessive market volatility has thrown up a number of opportunities, and he has been building up his exposure to high yield credit in particular.

"We are expecting policymakers will refinance European banks and this will result in the market rallying in Q4, potentially rising 10% and ending the year where it started at the 5,800 mark," said Becket.

"The equities which will enjoy a stronger recovery will be the mega caps with a strong brand and proven track record.

"High yield credit will produce strong relative returns for the next two years because with default rates likely to remain low, combined with high nominal yields and wide spreads over treasuries I would rather be a lender to than an owner of companies."

He has added 4% to his iShares FTSE 100 ETF since June, taking the weighting to 9.2%, in anticipation of a recovery.

Until the markets gets a much-needed boost, Becket added he will continue to hold the Melchior European Absolute Return fund, where the manager has a proven track record of making positive returns in falling markets through effective shorting.

"We are currently neural equities with around a 50% position and are looking to take advantage of swings in the market by tactically shorting equities," Becket said.

"Due to the uncertainty over the direction of the market, shorting equities offers a degree of protection."

PSigma is set to change the name of Becket's Balanced Managed Fund of Funds to the Psigma Dynamic Multi-Asset fund, to bring the name in line with the fund's investment objective.

The fund, which already has a multi-asset remit, will invest in between eight and 12 strategies at one given time, allowing Becket the freedom to establish his top-down views on the fund by moving in and out of asset classes.

Jonathan Roseweir, business manager at PSigma, said the name change will not effect the balanced nature on the fund, which is to produce equity style returns with low volatility.

"The name change will help demonstrate Tom adopts a ‘hands-on' and flexible investment approach with the ability to move asset allocation to reflect current market conditions," said Roseweir.