“Defence is the best offence” says Threadneedle’s Thornber

Stephen Thornber, Threadneedle Global Equities Fund Manager: "Uncertain macro economic factors together with the rapidly deteriorating corporate environment make the equity markets a dangerous place right now. Short-term trading, particularly in today's extremely volatile markets is very difficult and quite risky. As long term investors, we are looking for quality companies that can survive this economic cycle and emerge in a stronger position. As such we have been cautious and have positioned our portfolios defensively for some time and continue to believe this is the most appropriate strategy. With this defensive strategy in mind we are looking for companies with strong balance sheets, companies that can not only survive the current economic climate, but can emerge stronger and those able to use their financial resources to increase market share or acquire assets from weaker competitors. As such, BG remains one of our favoured names offering as it does have a strong balance sheet, defensive earnings from long-term contracts and hedged Liquid Natural Gas (LNG) production, as well as a diversified portfolio of attractive oil and gas assets which are expected to drive production growth well into the next decade. We also like CSL, the Australian health company, which has a strong position in the growing blood products industry and an attractive vaccines business, both of which are driving near-term growth. It has an interesting pipeline of potential new products and a debt free balance sheet enabling it to invest in R&D and giving it the option to make enhancing acquisitions."

"Whilst we are looking for these sorts of opportunities, as a general strategy we think it is still too early to call the turn in the market. We remain defensive, looking for large cap companies with low levels of debt, strong management's and stable earnings, whilst watching economic developments closely for signs of improvement. We have seen an unprecedented level of fiscal stimulus from governments around the world, at some point this, or future policy responses, will begin to have an effect on economic conditions, but for the moment we have no visibility on when that will be."