Fund bosses shrug off the correction

FUND managers yesterday said that UK markets were facing a correction but that the FTSE 100 would not fall below the 3,500 level as it did in March.<br /><br />They said they were not preparing for a severe correction, after the UK&rsquo;s blue chip index closed at 4,230 points yesterday, a 6.1 per cent fall on the highs of over 4,500 seen at the start of the month.<br /><br />And they added they remained bullish on the prospects for a sustained recovery, arguing that further confirmation of recent good news would see markets resume their rallies.<br /><br />Rod Barker, of Stanley Fink&rsquo;s hedge fund group ISAM, said: &ldquo;In my opinion we have turned a corner.&rdquo;<br /><br />He said the summer would be punctuated by some strategists predicting sharp falls in the market, but that any decline would be explained by profit taking &ndash; not a collapse in investor sentiment.<br /><br />Hedge fund heavyweight Jonathan Hughes-Morgan, co-founder of asset manager Occam, said he is &ldquo;definitely more positive&rdquo; than he was during the March lows.<br /><br />&ldquo;There has been no negative news, but yet markets have sold off. That tells me people are telling themselves &lsquo;well, we&rsquo;ve got a bit of profit so we will just take it off the table&rsquo;,&rdquo; he said.<br /><br />In a sign of his bullish stance, he added that the group&rsquo;s funds currently do not have a net &ldquo;short&rdquo; position on UK equities.<br /><br />And respected BlackRock small- and mid-cap fund manager Richard Plackett said investors should look on the bright side despite recent market falls. &ldquo;The recent round of rights issues has inevitably caused some indigestion,&rdquo; he added.<br /><br />Brewin Dolphin chief strategist Mike Lenhoff said he would be surprised if the market falls back under 4,000 points.<br /><br />&ldquo;The market is searching for some kind of confirmation of the underlying economic recovery it has been expecting,&rdquo; he added.<br /><br />But Motley Fool analyst David Kuo said the FTSE 100 is likely to fall back under the 4,000 level, amid a correction of up to 15 per cent from this month&rsquo;s highs.<br /><br />&ldquo;The markets are probably well ahead of themselves, in terms of the current price-to-earnings ratios we are seeing, so it is difficult for them to go forward from here,&rdquo; he added.<br /><br />The FTSE 100 fell to lows of 3,521 points in early March, before staging a 27.8 per cent recovery over the last three months.