Neptune managing director Robin Geffen is convinced it is too early to buy back into banks, with more than half of the write-down pain still to be realised.
Geffen, the £632m Neptune Global Equity fund manager, retained no developed market exposure to banks and insurance companies in Q4 2007, with minimal financial emerging market holdings.
“I think probably somewhere between a third and a half of the pain has actually been taken by way of write-downs so far and as I say I don’t think anybody out there should be trusting a bank’s balance sheet or profit statements until they have a set of audited accounts in front of them,” Geffen says.
The Global Equity fund remains overweight in energy, currently its second largest sector at 15.6%.
Geffen feels strongly on the prospects for energy, expecting oil to remain firmly over $80 a barrel for the foreseeable future.
“I remember this time a year ago talking about oil prices and all the people that felt it would drop back to $40 or $50 a barrel,” he says.
“We felt it would be much stronger than that and turned out to be fundamentally correct. I don’t see any reasons to look for a lower oil price.”
As the markets took a turn for the worse in Q4, Geffen says his fund benefited by being overweight in India and Russia, markets which climbed 26.2% and 21.55% respectively during the period.
“Russia was obviously one of our key over-weights and the strengths of that market and its disengagement from the financial structures of the developed market became very evident, as indeed did the very separate nature of the Indian revival, the Indian market is not dependant on global trade to the extent that it is a net importer,” Geffen adds.
“I still think there are some very interesting opportunities in the US, but in a global context I would expect to have less invested there in 2008 than in 2007.”
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