Investment: ‘There continues to be great value in equities’

By Alastair Robson
Published on Sunday 1 January 2012 00:00

IF 2012 is to be anything like the past few years the only certainty is that there are uncertain times ahead.

Last year the FTSE 100 index took several peeks over the 6,000 level but towards the end of the year swam for cover below 5,000.

Let’s make no bones about it – some investors will have suffered significant downsides to their portfolios over this period. Others will have spotted value points in the year’s fluctuations and been able to make good gains.

No matter which of the two best reflects your own experience you must appreciate that the market is always right.

So how do we join the “others” over the course of 2012?

Understanding value must be core to your investments over the next 12 months. Unquestionably there continues to be great value to be spotted in equity markets worldwide.

We speak to a lot of fund managers who have walls of cash ready to reinvest in equities when the timing is right.

For all its troubles the Eurozone remains of significant interest for investors, with some high quality operators ready to make marked progress once the uncertain economic cloud dissipates.

We believe there continues to be value in companies in the food sector in particular – such as McDonald’s and Domino’s Pizza – and car part suppliers, despite the fact that these companies shares are trading at record highs.

These are good quality equities with a solid market following. Identifying opportunities should also not just confined to equities. Gold remains of interest to us. We believe even at today’s high levels it represents value, particularly if, as many experts do, you believe inflation is on our doorstep.

We expect the FTSE 100 index to rise and nudge the 6,000 level at the end of 2012.

There may be expected and unexpected events and consequences that lead us there. However setting out your investment principles, understanding and being loyal to your attitude to risk will hopefully lead to many happy returns over the course of next year.

• Alastair Robson is managing director of Edinburgh-based IFA Robson Macintosh

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