Schroders positions for modest growth in 2005

British fund manager firm Schroders Plc said on Wednesday it remains positioned for equity market gains in 2005 although it expects the world economy to grow at only a modest pace next year.

Schroders is slightly overweight equities because it is only mildly bullish on stocks because economic growth is likely to slow, with the weak dollar and high oil prices a headache, its senior economist told journalists. "Leading indicators for the world economy are all beginning to slow down," Keith Wade, Schroders chief economist, said."The big stimulus from U.S. monetary policy has gone."

Schroders is mildly underweight bonds, taking the view that stocks pay a superior risk premium than fixed income assets.One of Britain's oldest independent fund firms, Schroders raised global exposure to government bonds at the expense of cash earlier this month due to weak growth and low inflation expectations.

The firm forecasts that U.S. gross domestic product will rise by only 3.0 percent in real terms during 2005, while monetary policy in the euro zone may be loosened to counter the export-blunting impact of a high euro exchange rate against the dollar, Wade said.

"I think there is a good chance they (the European Central Bank) will put interest rate cuts on the agenda," Wade said.In its broad asset allocations announced earlier in November, Schroders is underweight U.S. and Pacific ex-Japan equities. It is neutral corporate bonds, high-yield bonds and index-linked debt.The firm manages a total of 99.8 billion pounds ($185.5 billion) of assets.

(From Reuters, November 24, 2004)

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