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‘The markets can and do overshoot, so selling at all costs is not desirable’“Based on these assumptions, we think a medium-term correction of 10% in European stocks is to be expected, while a decline of the pound against the US dollar in the order of 15% is likely. But in the short run, markets are definitely going to overshoot that. Despite the low-yield environment, we expect government bonds to act as safe havens once again, while credit spreads are set to rise.”
‘We do not expect a replay of the 2011/2012 sovereign crisis’“The European Central Bank and US Federal Reserve will most likely come out with statements and action to support the markets. As the ECB is already active in the market we do not expect a replay of the 2011/2012 sovereign crisis, but it does not circumvent weakness in peripheral markets.”
‘Volatility can create opportunities caused by irrational behavior by investors’“The current market environment has an impact on our Investment Grade and High Yield funds. On a total return basis, the funds which will be impacted most are Robeco’s Financial Institutions Bonds, Global Credits, Global and European High Yield funds. The volatility can create opportunities caused by irrational behavior by investors. Robeco’s fund managers are ready to spot any investment anomaly if it arises.”
‘We do not see this as a buying opportunity for equities’“As a consequence we do not see this as a buying opportunity for equities. In the portfolio we have a full position in the US and Canada which will relatively be less effected. We have sold a future position in the UK to neutralize the country risk. In the UK we have no local banks or real estate. The stocks that we do own in the UK have a large part of their sales outside the country, so there the depreciation of the British pound should help. We also have positions in continental European financials like ING and Intesa which could be affected by more than average in terms of equity prices.”
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