As the nervousness surrounding financials continues, PSigma Income fund manager Bill Mott is bucking the trend and increasing his stake in the sector.
Mott says this end of the market offers “outstandingly good value”, and just weeks after upping the fund’s weighting in banks to 22%, he has increased it further to 25%. It takes the fund’s total level in financials to 35%.
Amid the volatility, Mott says he can’t remember ever being so active over a four-week period.
He says his belief in emerging markets and long-term global growth meant the fund performed well in the period.
“We maintained our discipline and set some fixed ‘buying price targets’ for some of our favoured mid-cap stocks which articulated this theme,” he says.
“This resulted in an increase in our exposure to non-FTSE 100 stocks in the fund, rising to 18% from its previous under 10% position.”
Mott says the strong performance of other sectors has more than compensated for the current turmoil in financials and now is a good time to buy.
“We now believe that the financial sectors are offering outstandingly good value,” he says.
“Not only do the banks offer excellent long-term value but, in our opinion, from a sentiment point of view, we seem to be close to ‘the eye of the storm’.
“It seems unlikely to us, given the huge publicity of the sub-prime crisis, that any major UK-quoted banks are harbouring balance sheet holes which are not already discounted by the market.”
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