Eurozone crisis will create fresh opportunities

Investors need to be ready to change course quickly this year says one London investment expert.

Financial markets are heading for a crunch point which will create new opportunities for investors – that's the view of investment adviser Brian Dennehy, who this week published the 21st annual edition of his firm's TopFunds guide.

"We could encounter a significant turning point in 2012 as the eurozone crisis stumbles to new extremes," Mr Dennehy said. "It will force more effective action by politicians and create long-awaited opportunities for bargain-hunting investors."

He believes politics will play an important part in effective investment planning this year.

"Any investor or adviser who chooses to ignore the political angle in their investment planning is being negligent," he warned.

"However the catalyst for greater turbulence throughout 2012 will be angry voters, while in 2011 it was incompetent politicians."

He said investors hoping to beat the markets this year need to be prepared to change course under conditions of great uncertainty.

The problem, of course, is the ongoing attempts to rescue the eurozone by restructuring.

The changes will impose limits on the spending of all members of the eurozone, which will be the greatest constitutional change for the countries affected since 1945. The fact that the proposed spending limits will be enforced by the European Commission effectively means a loss of sovereignty in all 17 eurozone countries, points out Mr Dennehy. He said the changes will have a greater impact than the introduction of the euro.

"But the proposal still has to be approved by individual governments and, crucially, by voters in many cases," he pointed out. "Will people in Spain or Greece or France accept that decisions on new hospitals or schools will effectively be decided in Brussels or Frankfurt?"

So what opportunities could that create for British investors? "There are plenty of individual UK businesses that are adjusting well to a difficult environment," said Mr Dennehy. As a consequence he suggests looking at UK growth funds.

"Even in the current difficult conditions there are UK growth funds performing commendably, " he said, mentioning the JOHCM UK Opportunities fund, which grew 4.3 per cent last year, and the Liontrust Special Situations, which was up 7.5 per cent in 2011. However, he added that investing solely in the UK will mean missing out on overseas potential.

Mr Dennehy believes now is not the time to buy into the US, but that, further afield, investors seeking income could do well to look east.

"Asian economies are close to a new upswing," he predicted. "In the short term, the storms reaching out from the eurozone will delay a positive response by Asian stock markets, but that turnaround will come."

He picked the Newton Asian Income fund's outstanding track record for growth and said, looking ahead, that Henderson's Asian Dividend Income has an interesting edge with its greater exposure in China.

"There are also some outstanding funds with a global mandate," Mr Dennehy said, citing Newton Global Higher Income, M&G Global Dividend and Artemis Global Income.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there