08.02.2010

John Chatfeild-Roberts, Jupiter Chief Investment Officer and head of the Jupiter Independent Funds Team, said:

"Troubles seldom come singly. We are entering a phase of transition where fiscal and monetary stimuli are being withdrawn. Western economies must now see if these have been enough to kick-start sustainable growth. The jury is out on whether they can, yet most equity markets trade at fair value. That sets the scene for a potential bout of volatility.

For some time we have been concerned that the 'carry trade' trend of borrowing in currencies such as the US dollar with low interest rates to invest in assets with higher yields could not last forever. Any shock or series of shocks could send investors back to the haven of the world's reserve currency and force speculators to unwind positions in commodities and emerging markets.

Recently we have seen a number of shocks. The US may be the engine of world growth but China is its starter motor. The world's third biggest economy is now tightening monetary policy to contain inflation. Fearing slower growth, money is leaving emerging markets and returning to the US, boosting the dollar.

In the US, President Obama's proposals to curtail the size and trading activities of banks have also sent a shudder through markets. And in Europe, the possibility of a sovereign default by Greece has unnerved markets because of the prospects of contagion. Any default would push up the borrowing costs for other troubled countries.

That said, despite anaemic conditions in the West, emerging economies are likely to continue to deliver attractive rates of economic growth. Flexible asset allocation combined with selective stock picking offers the best route to profiting in uncertain times."

NOTE

Jupiter Unit Trust Managers Limited (JUTM) and Jupiter Asset Management Limited (JAM) are both authorised and regulated by the Financial Services Authority and their registered address is 1 Grosvenor Place London SW1X 7JJ. They are both subsidiaries of Jupiter Investment Management Group Limited and the group is collectively known as "Jupiter". The above commentary represents the views of the Fund Manager at the time of preparation and may be subject to change and this is particularly likely during periods of rapidly changing market circumstances. Their views are not necessarily those of Jupiter and should not be interpreted as investment advice. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. Past Performance should not be seen as a guide to future returns, the value of an investment and the income from it can fall as well as rise.