One of the better known and better performing Fund Managers – Richard Buxton who runs the Schroder UK Alpha Fund is reported by Money Marketing to believe that interest rates won’t rise here in the UK during 2011. Mr Buxton is a much admired Fund Manager and has had strong results with the UK Alpha Fund, depending on when you compare the data. Prior to his time at Schroders he ran the UK Equity Growth Fund at Barings, which was also successful. Mind you I remember being at a seminar in the City in 1999 whilst he was at Barings and I came away with the suggestion that we should also be mortgaging our grandmothers to take advantage of the rising dot.coms. It is pretty hard to go against the views of some of the more successful Fund Managers and most investors were caught up in the subsequent crash. Of course making mistakes is all a part of life and particularly investing. However, I am still of the view that the majoriy of Fund Managers do not consistently outperform the market.
I hope that Richard is right and that rates remain as they are, we all know that the economy is fragile and inflation looks as though it has relented a little. However, markets and market makers are complex and frankly some of the alledged inflation due to global food prices has nothing to do with reality or crop harvests and rather more to do with derivative trading – taking bets (albeit “educated ones”) on the market which then make the market. In my humble opinion, this is not a good thing.
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