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A search for silver linings

Niall Brady - The Sunday Times,

Sun, Dec 28th 2008

The Best and Worst Funds 2008

How they compared

How I caught the Biotech on the bounce.

Kevin Hannigan invested in only one equity based fund this year -- and it proved an extremely wise choice.

BIOTECHNOLOGY was one of the few bright spots for Irish managed equity funds 2008. Investors, however, were only recovering ground lost in the past, when shares in companies specialising in emerging sciences, such as genetic engineering and DNA technology, plunged then remained in the doldrums.

Kevin Hannigan, 48, an economic consultant from Gorey, Co Wexford has had an eight year rollercoaster ride in QUINN-life's Biotech fund - the only Irish Equity fund to make money in 2008. By tracking the NASDAQ's biotechnology index, it grew by 15%.

"The sector was knocked back too far after the dotcom crash of 2000 - 2003," he said. Biotech's have moved from the fringes to the mainstream since then - a lot have been integrated with the big pharmaceutical companies. This is a defensive area, especially as an ageing population will need more new medicines."

Hannigan picked another winner by investing in QUINN's Euro bond fund, which gained almost 8% in 2008 by tracking government gilts. Most of his money, though, is on deposit.

"I became bearish on equities in the middle of 2006 and went to cash and bonds instead, although I hung on to the Biotech fund," he said. "I probably switched too early, but all of the stock market growth from 2006 to the middle of 2007 was simply a bubble."

Hannigan is considering a return to equities in 2009, but fears any gains could be wiped out by extreme volatility still gripping the market.

"I prefer to take a short term horizon to equities - I don't believe in the buy-and-hold strategy, he said. "There's too much volatility out there, however, unless you're a day trader."

Signs for recovery in America would prompt him to go for his cheque book, but he said: "It's too early to say we've seen the bottom of the cycle".

While many stocks look cheap, Hannigan is interested only in those with good growth prospects. "I don't buy the notion that now is the time to buy simply because markets have fallen. Markets don't work like that."