What a Top Award-Winning Fund Manager is doing

Canada's Equity Manager of the Year worries about the market impact of huge government deficits.

Eric Bushell, chief investment officer at Signature Global Advisors, says the global economy will face a crucial test in 2010 to determine if it can manage without extensive support by governments and central bankers.

"I am in the cautious camp," says Bushell, who is this year's winner of the Morningstar Equity Fund Manager of the Year award. This caution "plays into my theme of emphasizing those sectors in the equity market that are defensive and/or generate strong cash flow and dividends for investors."

On the health of the global economy, Bushell's call is that there will be an ongoing need for government stimulus. "Some key areas of weakness persist, for example the U.S. housing market."

At the same time, he says, there are growing concerns in the global debt market about the huge fiscal deficits that governments are running up to provide this stimulus. "This is rattling the sovereign debt market."

The good news for equity investors, says Bushell, is that central bankers are likely to keep short-term interest rates as low as possible for some time, given the uncertain economic outlook.

In the case of energy, Bushell is favouring exploration and production companies focusing on oil. "This commodity is a hedge against the possible resurgence of inflation over the longer term."



Saverio Manzo