The dollar has had a temporary pullback on the Fed having been more dovish in recent months than expected by markets, says Zahn. “But I think that the dollar should still strengthen from here, as fundamentals in both Japan and Europe are weaker than in the US. The interest rate differential also means the dollar should do alright going forward.”
Within fixed income, Zahn continues to see the best opportunities in credit, as he did back in November when we interviewed him previously. Zahn prefers European fixed income over US bonds because the ECB is now also buying corporate debt. “It’s only investment-grade, but this will still flow down to the high yield sector,” he says. “You’re not going to make huge returns out of it, but compared to what you get elsewhere in fixed income it’s attractive.”
Zahn is anticipating “great opportunities to make money” on the back of the Brexit referendum. He believes a lot of the Brexit risk has already been priced into UK assets. “But if Brexit doesn’t happen, the recent sell-off in sterling and UK corporates offers great opportunity. We’ll be looking at that when volatility increases in the run-up to the vote,” he says. “We’ve lightened up on our UK exposure now in anticipation that we can do something as we get to the final answer.”
Dylan Emery is the group editorial director of Last Word. He is one of the founders of the company and he created International Adviser, Portfolio Adviser and Expert Investor. His primary responsibilities...
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