Giles Hargreave believes UK investors and the UK economy exist in “a parallel universe”

Fri, 14 Jan 2011 12:58:27 +0000

UK investors and the UK economy exist “in a parallel universe” according to small cap investment expert Giles Hargreave.

He believes that the UK economy will struggle over the next decade. As a result their investment teams are avoiding ‘pure’ UK stocks, instead investing in UK listed, but non-domiciled, stocks.

"I am not keen on the UK at the moment, the UK deficit is huge and the next government, whomever that may be, will have a nightmare trying to deal with it. The AIM market is the place to be, the value lying in companies listed with overseas interests. We have significantly increased exposure to non-UK earning AIM stocks in our portfolios; 35% of our top 20 holdings in Marlborough Special Situations are non-UK focused."

Giles Hargreave and his team are currently seeing value in South East Asia, China, Latin America and Africa and believe that if an investor is interested in emerging markets then AIM is ideal.

"There’s a great deal of value in South East Asia, China, Latin America and Africa at the moment. For any UK based emerging markets investor the AIM market should not be overlooked when you consider gaining exposure to these markets. There are many companies listed on AIM focused on these regions and you benefit from their being London listed.

"At present we’re particularly interested in commodity stocks, which have been performing strongly. We see daily opportunities in iron ore and coal extraction, for example. Software is another key theme, in particular firms that are not product dependent such as data centre providers, although it should be noted that these sorts of companies tend to be very illiquid so investing in them is not for the faint hearted.

"Another theme we are following in our portfolios at present is shortages: sectors where a shortage of 'a' resource exist, in particular those that are not affected by government subsidies like much of the renewable energy sectors."

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Giles Hargreave believes UK investors and the UK economy exist in “a parallel universe”