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BT’s view of the world

THE BT Funds Management group is one of the largest funds management teams in Australia.

In that capacity it is often cited as having a keen understanding of the markets here and in the rest of the world.

The company recently came to town to undertake a road show for advisers and present its view of what has happened in the world over the past 12 months. It was not a pretty picture.

Global markets in 2001 sim-ply carried on the volatility that they demonstrated in 2000.

BT Funds Management sliced the year into four digestible quarters to come up with the following:

March Quarter: Growth was strong. Central banks were still raising interest rates, which was a negative environment for the financial sector. Most technology companies reached a peak.

June Quarter: Concerns that higher US interest rates and oil prices would constrain US growth led to a major rotation away from TIME sectors. There was also some concern over the cash flow positions of a number of dot.com companies as well as negative news flow in the European telecoms sector.

September Quarter: A number of high profile com-panies in the technology sector issued profit warnings. Investors were biased towards those sectors with greater earnings certainty as well as value stocks.

December Quarter: Invest-ors continued to shy away from high PE stocks, towards cyclical sectors which were trading at much cheaper valuation levels. Expectations of lower official interest rates in the US were also being factored into the market.

The upshot of all this pessimism was to see every mar-ket around the world end the year down. The early part of this year was no better with most markets still exhibiting the same levels of volatility.

There are few, if any, fund managers forecasting any decrease in the volatility that we have been experiencing.

All we can advise readers to do at this stage is to batten down the hatches and be prepared for more of the same this year.

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