Four defensive stocks to buy now

Professional investor Sandy Cross expects a weak global recovery to keep financial markets volatile, and so he looks for equities that can produce a high and sustainable income. Here, he tips four solid defensive companies to buy now.

The bank crises and their aftershocks seemed pretty alarming at the time. But for most investors those days are long gone. We aren't seeing an apocalyptic end to capitalism, just a bad recession. The wrinkle is that this is a recession associated with a banking crisis. Banking-crisis recessions tend to be followed by anaemic recoveries thanks to the damage done to the mechanism for recycling savings and allocating capital. Given that pre-crash consumption was driven by credit credit that is no longer available a return to those levels of economic activity is unlikely. Add in weak demand, unemployment and spare capacity, and I see interest rates remaining lower for longer than many people expect.

Economic news has been more encouraging recently. But these days it pays to remember that the words 'off a low base' should generally be added after the word 'increase'. Note, for example, that July's 9.6% rise in US new home sales came in the context of a 76.3% peak-to-trough fall in volumes. We expect that a fairly weak global recovery will keep financial markets volatile. To manage this we use an advanced overlay strategy (which also increases diversification and allows us to access specialist return opportunities).

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