VAR Capital CIO Shares His Market Views

LONDON, September 10, 2018 (Newswire.com) - VAR Capital Co-Founder and CIO Rajat Sharma shares his views on the markets with the editor of Portfolio Adviser magazine.

CIO Rajat Sharma says: “We feel the equity markets are overvalued, and there are imminent geopolitical risks that could lead to a correction. The five-year investment grade credit spreads are also at a historic low. Therefore, we are reducing our risks in both equities and bonds.”

According to Sharma, the VAR team is currently in a "wait and watch" mode when considering low-risk portfolios and that it is the "opportune time" to invest in defensive sectors like pharmaceuticals and telecoms. "We are overweight in defenses, cash, and 'event' names in equities," he explains. "Some earnings multiples on a cyclical-adjusted basis are at all-time highs, and that is something to be worried about." 

Sharma believes that this is the time to invest in defensive sectors rather than choosing cyclical stocks. The VAR team, within its exposure to equities, has chosen more defensive stocks, and within bonds, has reduced their exposure to high-yield bonds significantly, from 14% to about 9% since the beginning of 2017. VAR has also decreased the duration of its investment grade bonds from six to four years and switched to bonds with a better credit quality.

Source: VAR Capital