Richard Buxton: Is the rally sustainable?

While the rise of global equity markets over the past year has been extraordinary, it is good to put it into context.

At the start of 2008 we had braced ourselves for a tougher environment for investing – but there was no way we could anticipate anything like the events that actually unfolded. The Schroder UK Alpha Plus fund was not positioned in defensive sectors, but remained exposed to cyclical areas including mining companies and consumer names. The share prices of these types of businesses plummeted – irrespective of long-term prospects or financial stability – as investors became increasingly convinced of economic Armageddon. We felt the market’s reaction was overdone and increased our exposure...