Gartmore sees UK investors repositioning for 2010

Leigh Himsworth, Head of UK Equities at Gartmore, says that the recent volatility seen in markets and the shift in sector performances could mark investors repositioning for 2010.

The early running in equities so far has been based around the strength of global economic growth led by a resurgent Far East. Likewise, commodity price strength has been driven by a combination of a weakening US dollar and the resulting demand from countries like China, with the CRB Spot Index up more than 30% since the start of the year.

The risk to investors, according to Leigh, is getting caught up in the excitement of an emerging theme and piling into certain sectors like mining, rather than maintaining focus on valuations.

"Whilst Far Eastern economies may well prove to be the engine for growth into the foreseeable future, we must be wary of being ‘sucked-in' to this trade and being ‘swept along' with the rest of the investment community." 

Given the uncertainty of the outlook for 2010 and the lack of discrimination within asset classes and sectors, he is keeping sector weighting fairly neutral and concentrated on identifying value at a stock level.

"The market movements of the past weeks suggest to me that we are in the process of seeing a change of leadership.  While some cyclical sectors, like mining, have continued to climb, others have levelled off. There are also stirrings in some of the defensive sectors that have been weak during this year's rally."

 "Our aim is to remain vigilant and to identify value opportunities, often in less fashionable areas, perhaps in more UK consumer-focused areas, as these may become ‘oversold' in the stampede for overseas earnings."