Speaking at a 2015 outlook event, Gary Potter, co-head of F&C’s multi-manager team, said a global fall in oil prices will be a major factor in “dragging” the world into positive economic territory, and will lead to increased economic momentum.
“Oil is going to be the major factor determining what happens in the global economy this year,” he added. “Oil prices falling quickly has affected high yield bonds negatively, but the benefits on the long term will be massive.”
Oil prices have fallen 60% from their peak in June 2014 and have reached their lowest since 2009, due to a combination of rising production, weaker-than-expected demand in Europe and Asia and the increased production of natural gas in the US from fracking.
This week they dropped to $46 a barrel, with Goldman Sachs predicting a fall to $41 in three months and $39 in six months, before recovering to $65 by the end of the year.
Similarly, Potter predicted that demand would increase over the year as demand for petrol increases due to lower prices.
More generally, he said that the multi-manager team believed 2015 will be characterised by an “increase in volatility”, and that the world economy will be “growing strongly” by the end of the year.
Other issues outlined by Potter and fellow co-head Rob Burdett as concerns included elections in Spain, Portugal, and Greece, geopolitical issues in Russia and the Middle East, the Ebola virus and the liquidity of fixed income products.
In December, F&C announced that Michael Ulrich and Tom Wilson will take over the F&C UK Alpha Fund after a period of “disappointing” performance from previous manager Peter Lees.
Lees managed the £78m fund since September 2008, and it has consistently lagged its benchmark and its peer group.
