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Hedge Fund Investing Report: Active Diversification

New York (HedgeCo.net) – Growing numbers of middle class consumers in developing economies seeking better quality goods and services are boosting the earnings of regional and multinational companies across a range of sectors, according to the latest investment outlook of ABN AMRO Private Banking.

Selected companies in the speciality chemical, healthcare services and environmental testing sectors (particularly those servicing food & beverage and IT businesses) stand to gain, as continued strong economic growth of 8% on average across Asia and Latin America – twice that of European and US economies – increases demand for high quality offerings.

“We are seeing growing numbers of discerning consumers in developing countries fuel demand for higher quality products and services from both regional and multinational companies – across a range of consumer related sectors,” said Didier Duret, Chief Investment Officer of ABN AMRO Private Banking.

Global equity recommendations from the bank’s 44 strong Research & Strategy team in the Q4 report ‘Looking at the Big Picture’, include DSM and Symrise (speciality chemicals), Fresenius Medical Care, Mead Johnson Nutrition and Abbott Laboratories (healthcare services); as well as SGS, Intertek, Bureau Veritas and Thermo Fisher Scientific (environmental testing). A sharpened focus on oil industry safety following the Gulf of Mexico disaster will benefit Semcorp Marine, Keppel and Vopak, the report says.

Investors are advised on how best to navigate the current conflict between weak macro-economic data in established markets, alongside a more positive picture for corporate earnings. The report also argues for cautious optimism regarding the threat of a double dip recession.

Duret believes the fiscal policies of major economies still grappling with the aftermath of the financial crisis, are encouraging investors to look beyond traditional safe havens of investment, particularly government fixed income. The bank recommends investors consider low grade corporate bonds and high yield bonds, as well as equities providing strong dividends. It also sees renewed upside in commodities.

“Central bank policies are creating a strong incentive for investors to actively seek out risk and yield,” said Mr Duret. “We are recommending active diversification, to mitigate the impact of continued low interest rates.”

Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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