Careful stock selection paramount in times of sparing opportunities

It may be too soon to talk about the green shoots of economic recovery, but fiscal and monetary stimulus packages have certainly started to have an effect.

Optimism has increased so complete financial meltdown has been averted and credit spreads have began to normalise, tightening significantly since market lows in March. Credit has historically outperformed other asset classes in the first stages of an economic recovery, and there is no reason to believe this cycle will be any different. Corporate bond markets had one of their best ever quarters in the Q2 this year. Even after the tumultuous start to the year, the iBoxx Sterling Corporates Index returned 2.2% to the end of June, outperforming both gilts and UK equities. Distressed sectors ...