M&G sees value in long-dated government bonds, non-US equities

MUMBAI (Reuters) – M&G Investments sees attractive valuations in some longer-duration government bonds and non-U.S. equities, a multi-asset fund manager at the London-based firm said on Thursday.

A day after the Federal Reserve cut its interest rate by 50 basis points and revised its monetary policy outlook, M&G’s Gautam Samarth said his firm will stay “reactive” to market moves, looking for contrarian opportunities when trades show too much pessimism or optimism.

“We have some exposure in the U.S., UK and German longer-dated government bonds, Samarth told the Reuters Global Markets Forum. “Valuations are fair, and they offer the potential to diversify, if growth does indeed start to slow.”

As of June 30, M&G Investments managed assets worth more than 346 billion pounds ($458 billion).

Samarth also said M&G has been “leaning cautious” on short-term rates after the rapid moves in the market since April.

“This appears to be an environment where the risks are contained, but the pricing of risk is getting dearer,” he said.

He added that this is why the Fed chose to cut, and why the central bank has to shift to an accommodative stance.

In equity markets, Samarth said China is attractively priced, and with negative sentiment attached to markets there, it is “an opportunity”.

Mexico and Brazil offer value within Latin America, he said, adding that both countries have “relatively idiosyncratic opportunity” to invest due to the political landscape. While European and UK markets have performed well, they still offer good value to a lesser extent, he said.

Despite expensive valuations, India is delivering spectacular corporate profits, Samarth said.

“We find it hard to own India at current levels but we certainly wouldn’t bet against it.”

($1 = 1.3246 pounds)

Join GMF on LSEG Messenger for live interviews: )