LGIM's Gill: Market volatility may subside at end of Q1

An end may be in sight to the daily volatility which confounded investors last year, according to Ben Gill, manager of the £509m Legal & General Global Macro Themes fund.

Gill said daily movements may subside towards the end of the first quarter of 2012: "We are still going to have the follow-up to all last year's gyrations for the first couple of months, but 2012 may be more straightforward with fewer daily value changes."

He said while investors are craving clarity on the future of the eurozone, political will means events are unlikely to come to a head this year.

"There will be a slowdown in the first half, but then a realisation we have come out of it in the second half, leaving markets flatter by the end of 2012. But it will be more of a down than an up year."

The Global Macro Themes fund remains cautiously positioned in the belief political risk remains heightened.

Other problems are also emerging, according to the manager. He warned Eastern Europe will continue to have problems and will be much more difficult to own this year.

"Our risk is quite low at this point in time, because the risk/reward trade-off is poor. We have to be realistic - we are entering into a Japanese scenario where rates are low for a long time," he said.

Gill is more positive on US-related investments as he believes the US economy's flexibility has been demonstrated via its ability to recover more quickly than some of its peers.

"Currency-wise we like Mexico and Canada because they will benefit from the US holding up.

"Most of the second half of last year we did not like precious metals but we have started buying gold again. We believe it has gone through its correction and will start to appreciate again," Gill added.