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Schroders: Don't be caught out by 'short-term view'

Investors reacting to very short-term factors – such as those caused Thursday by the European Central Bank's announcement that it is set to review further stimulus – could be caught out, the chief executive of asset management firm Schroders told CNBC on Friday.

Speaking to CNBC on the sidelines of the World Economic Forum (WEF) in Davos, Michael Dobson said that markets reacting to every single comment from the ECB and its president Mario Draghi could find themselves making the wrong decisions.

European stocks were buoyed on Thursday by dovish remarks from the ECB's president, which hinted at more monetary easing.

At a press conference on Thursday afternoon, Draghi said the bank will "review and possibly reconsider" its policy stance in March. The bank left rates on hold, but in the face of heavy losses on financial markets since the start of the year, Draghi said it would not "surrender".

Draghi's remarks were seen as a clear hint that the bank could unleash further stimulus and prompted European markets to rebound. Dobson said it was important to look beyond the short-term impact of ECB decision-making, however.

"This has a short-term impact on markets which investors need to look through. So I think investors trying to react to very short-term moves will be caught out and will be wrong," he said.

A styrofoam bull figure lies on its side on a counter in front of the German share price index DAX board at Frankfurt's stock exchange in Frankfurt, Germany January 7, 2016.
Kai Pfaffenbach | Reuters
A styrofoam bull figure lies on its side on a counter in front of the German share price index DAX board at Frankfurt's stock exchange in Frankfurt, Germany January 7, 2016.

"So I think it's essential in markets like this, and at all times, to take a long-term view. What you've seen in the shake-out is weaker companies being hit very hard but also some very high-quality companies being seriously de-rated."

"I think if you're prepared to take a long-term view and if you can live with volatility in the short-term then there are some quite interesting opportunities emerging."

The fund management industry has seen a "big shift to passive" fund management "and that's not going to change", the head of Schroders (which actively manages funds) said, but there was a "big opportunity and relevance for active management."

Dobson attributed current market volatility to concerns over U.S. growth, low oil prices and fears over a slowdown in China.

"But as far as U.S. is concerned, we don't see the U.S. slipping into recession, consumer demand is holding up so we don't see that danger. As far as oil is concerned, (it's) a major dislocation...but in the longer term, (it's) supportive in terms of where the consumer stands and that will come through," he said.

Asked what 2016 has in store for Schroders, Dobson said "I hope it'll be a lot better than the first two weeks. We haven't seen much in the way of clients taking action on the back of these very short-term movements but clearly if the market continues to be very weak it's going to have an impact, particularly on retail investors who will be shaken by that."

He remained optimistic, saying that he expects to see a more stable market emerge because the "underlying outlook is not too bad."

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