Wednesday May 31, 2017 15:52
(Kitco News) - With equity markets struggling to find new momentum at record highs, one UK investment firm is recommending investors become a little more defensive, even increasing their exposure to gold.
In an interview with investment research firm MorningStar, Jonathan Gumpel, a director at Brooks Macdonald Asset Management said that his firm is net-short U.S. equities. With the low, volatility, high debt levels and over-stretched evaluations, Gumpel compared today’s financial environment with 2007, which saw the S&P 500 lose more than 57% within a 17-month period.
“With volatility reducing and prices so high, it is probably not the time to take too many risks,” he said in the video interview. “The selection for us becomes trying to find the least worst investments and to really look for assets that give us a degree of an ‘each way bet.’”
Gumpel added that he also doesn’t like traditional bonds as that market is also overvalued.
“With bond valuations as high they are, you have to be a lot more thoughtful about where you invest now,” he said.
Gumpel added that his firm likes real assets and expects that gold could do well in an environment that sees a weaker U.S. economy drag down equity prices.
“Inflation-protected assets are a good place to sit in for the short to medium term.
Brooks Macdonald has assets under management of almost $13 billion as of March 31.
According to some analysts, strength in the equity market has been a significant headwind to gold prices. However, despite reduced investor interest, gold has managed to hold important key levels.
The yellow metals’ rally Wednesday has helped the market close in slightly positive territory for the month, extending its winning streak five consecutive month. August gold futures settled Wednesday’s session at a one-month high at $1,275.40 an ounce.
By Neils Christensen
For Kitco News