Gervais Williams: how will we get out of a recession?
We've endured plenty of recessions before. But the problem this time is that central banks don’t have much room to cut interest rates, says Gervais Williams.
Miton fund manager Gervais Williams is worried about recession. The recent inversion of the yield curve in the US (where long-term interest rates are lower than short-term ones) has historically predicted a downturn, and the problem is that central banks today don't have much room to cut interest rates. As Williams tells Jennifer Hill of Citywire's Investment Trust Insider: "We have recessions from time to time, but how do we get out of it this time?"
As a result, he has been taking out "downside protection" in the form of put options, which will pay out if the FTSE 100 slides. "They cost money, but if things get really nasty it's nice to have an asset that goes up."
Williams is, however, more relaxed about Brexit. "A chaotic Brexit isn't very likely. There might be short-term queues on motorways or difficulty getting foodstuffs over the border...but we've seen this type of thing before." Indeed, with his focus on small and micro-cap stocks, he sees it as a potential opportunity.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
For one thing, UK stocks are far cheaper than their US counterparts. As a result, "there is an astonishingly attractive potential for the UK market to enjoy a period of outperformance over other markets". He also expects to see plenty of takeovers after Brexit has been resolved, particularly among small companies with overseas earnings, as caution over the UK economy has left small stocks looking particularly cheap. "I don't ever remember seeing such a disparity between the majors and the micro caps."
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Investment trusts for your ISA
Looking to add investment trusts to your ISA? Here’s our pick of the top trust to consider before for your stocks and shares ISA
By Dan McEvoy Published
-
Billions of pounds languishing in low interest accounts as savings rates slashed
Savers are being urged to act as billions of pounds earn paltry interest rates. It comes as interest rates on variable savings accounts have fallen to their lowest levels since 2023.
By Daniel Hilton Published