PSigma’s Becket: FTSE will rise to 5,800 by year end

PSigma’s multi-asset manager Tom Becket believes the FTSE 100 will rise 10% by the end of year as European policymakers look set to recapitalise the Continent's highly indebted banks, boosting investor sentiment.

Becket believes the excessive market volatility has thrown up a number of opportunities, and he has been building up his exposure to high yield credit in particular.

"It is inevitable policymakers will refinance European banks and this will result in the market rallying in Q4, rising 10% and ending the year where it started at the 5,800 mark," said Becket.

"The equities which will enjoy a stronger recovery will be the mega caps with a strong brand and proven track record.

"High yield credit will produce strong returns for the next two years as with default rates likely to remain low, combined with high nominal yields and wide treasury spreads - the potential return is stronger for a lender than a buyer."

He has added 4% to his iShares FTSE 100 ETF since June, taking the weighting to 9.2%, in anticipation of a recovery.

Until the markets gets a much-needed boost, Becket added he will continue to hold the Melchoir European Absolute Return fund, which has a negative view on equities and is shorting the market.

"We are currently neural equities with a 50% position and are looking to take advantage of the swings in the market by shorting equities," Becket said.

"Due to the uncertainty over the direction of the market, shorting equities offers a degree of protection."

PSigma is set to change the name of Becket' Balanced Managed Fund of Funds to the PSsigma Dynamic Multi-Asset fund, to bring the name in line with the fund's investment objective.

The fund, which already has a multi-asset remit, will invest in between eight and 12 strategies at one given time, allowing Becket the freedom to establish his top-down views on the fund by moving in and out of asset classes.

Jonathan Roseweir, business manager at PSigma, said the name change will not effect the balanced nature on the fund, which is to produce equity style returns with low volatility.

"The name change will help demonstrate Tom adopts a ‘hands-on' and flexible investment approach with the ability to move asset allocation to reflect current market conditions," said Roseweir.