Leading fund managers reject double dip recession fears

Many of the UK’s leading fund managers are now dismissing the chances of the economy sliding into a double-dip recession and are growing increasingly bullish.

Artemis’s Adrian Frost, Mark Lyttleton from BlackRock, Schroders’ head of UK equities Richard Buxton and Skandia’s Ryan Hughes, who between them run over £8 billion of retail money, all say growth will be stronger than expected.

Robust growth

Frost, who oversees the £3.2 billion Artemis Income fund, said: ‘I don’t think the UK will experience a double dip. Confidence in this view is middling but to date the economy is proving to be more robust than feared.

‘Although the government cuts will in time put pressure on growth, the environment of rock bottom borrowing costs will continue and I believe this will ensure a much talked about double dip is avoided.’

Chugging along

The comments come after the International Monetary Fund last week gave its approval to the coalition government's plans to cut the deficit, concluding that the UK economy is 'on the mend'. In the same week, data confimed that the economy grew by 1.2% in the second quarter of the year. Some commentators though have argued that the cuts to frontline services and accompanying reduction in jobs will push the economy back into recession.

Mark Lyttleton, who runs the £2 billion BlackRock UK Absolute Alpha fund, believes the risk of a double dip is ‘low’ and he expects the global economy to pull through by ‘chugging along’.

‘For the UK in particular, I expect low levels of economic activity but the likelihood of a return to deep recession conditions is low,’ he said.

Surging market

By far and away the most bullish, however, is Richard Buxton, manager of the £2 billion Schroder UK Alpha Plus fund.

Although he expects the market to be rangebound for the remainder of the year, he predicts it will surge by 20% in 2011.

‘The consensus is that the UK and US will roll over into a double dip. There are concerns over the VAT rise and public sector job losses and the consensus is that it will be dreadful,’ Buxton says.

‘I expect us to muddle through with sluggish growth but I certainly don’t see the UK in negative territory. Given that equities are at very attractive valuations, I would expect the FTSE to gain 20% in 2011.’

Not out of the woods

Hughes adds: ‘While consensus among leading UK fund managers seems to be very much that the economy will not fall back into recession - triggering a much talked about and debated double-dip recession - there is a minority that still believes it is a possibility and this might just mean we are not completely out of the woods yet.’