ft.com/alphaville

A leading UK fund manager has sold off around half the equities in the portfolios he oversees in anticipation of an imminent and severe market correction, the FT reports.
Ken Murray, the founder and chief executive of Blue Planet Investment Management and former CEO of Murray Financial, has offloaded equities and cut the gearing on the firm’s portfolios to zero in the belief a US economic recession is set to wipe more than 20 per cent from the value of global stock markets. 

Blue Planet, a specialist investor in the financial sector with $350m of assets under management, operated three of the four best performing financial funds in the UK last year, according to figures from Bloomberg. Its Worldwide Financials fund was the best performing investment trust in the UK and the world over the last three years. Around 25 per cent of Blue Planet’s portfolios are now in cash.

Mr Murray warned the impending market correction was likely to be considerably more severe that either of the two most recent downturns that began in February just past and in April last year.

“People don’t want to believe bad things will happen but the market will correct very sharply,” he said. “It is time to get out of the market and I don’t think it would be unreasonable to expect the market to fall by more than 20 per cent in a very short space of time”.

Mr Murray said investors could ill afford to ignore warnings from the likes of Alan Greenspan. The former chairman of the Federal Reserve warned earlier this year that the US faced the risk of recession.

Last week, Bill Rhodes, Citi vice chairman and Citibank chief, also warned of a looming market correction, while on Monday, Tony Jackson said in the FT that investors, given the state of things, are not worrying enough.