Neptune US Opportunities fund manager Felix Wintle will continue his zero weighting in banks on expectations of further deterioration in the sector.
Wintle says the problems facing the US banking sector are severe, as seen in the Bear Stearns fire sale.
“We expect the global banking sector to enter into a new downturn, incurring further write-offs and profit declines as a result,” he says in a note to clients.
The US Opportunities fund is currently holding 20% cash, with Wintle waiting to buy back in to equities when opportunities arise.
“Whilst we are bullish over the year, we feel it is prudent to be cautious in the near term,” he says.
“Despite the negative headlines concerning sub-prime mortgages and US banks, there will be parts of the economy that will do well in 2008.”
Wintle says there is no shortage of “compelling” investment ideas in the US market.
“We expect our exposure to sectors like materials and industrials to deliver performance this year, as they have done in previous years,” he says.
“Our agricultural stocks are well placed to perform well due to rising soft commodity prices.
“We remain overweight in the healthcare sector which saw some very healthy returns last year, coming mainly from our biotechnology stocks, three of which returned over 100% each.”
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