Beware green shoots

"Macro and corporate news flow remains generally very bleak", say Roger Guy and Guillaume Rambourg, managers of the European Selected Opportunities Fund and the SICAV Continental European Fund. Unemployment has soared and a dreadful first quarter reporting season is expected. However, they add that "this time around, there is no more ‘surprise effect' on the announcement of bad news unlike in 2008".

The managers have long argued that an inflection point in the equity markets would arrive once US real estate asset prices found a support level. Recently a few statistics have pointed to some forms of stabilisation on housing and inventory levels. But Roger and Guillaume emphasise that the data is fragile and has only been in positive territory for the past month.

"In the meantime, markets will remain volatile and sector rotation between defensive sectors and cyclical sectors will be brutal. Although there has been ‘less bad news' emerging lately, it may be premature to conclude that we have embarked upon a broader economic recovery".

Roger and Guillaume have remained faithful to their stock picking discipline which has led to the fund performing well over the past 10 years. They are taking advantage of the market's volatility as an opportunity to selectively invest in new ideas and pragmatically shape the content of the funds.

Both the European Selected Opportunities Fund and the SICAV Continental European Fund are AAA rated by Standards and Poors as of 31/03/09.