Chris Reid, manager of the Majedie UK Income fund has revealed five key stocks that he expects will help his fund maintain its top ranking in the UK Equity Income sector in the coming year.
Following last month's shock announcement that Neil Woodford is to leave Invesco Perpetual in April, some investors have started looking for alternatives to his popular Income and High Income funds.
Majedie's has returned 39.4% over the year to 18 October, according to Morningstar, while Woodford's Income and High Income funds have lagged the sector, returning 23.7% and 23%, respectively.
Reid (pictured) focuses on looking for undervalued companies that are about to undergo a transformation, and are generating income along the way.
While his fund has outperformed the majority of competitors in the last year, below he names five holdings he expects will help continue his impressive run.
BP has been among the fund's top ten for a while, although Reid has allowed the position to be diluted from 7.9% at the end of March to 4.4% at the end of September, as inflows have come in. Nonetheless, it remains a key holding which he is backing to outperform.
"BP has started to lead the oil sector and we can see evidence of cultural change in the company," Reid said. "It is not out of the woods yet, but it has started to move forward."
Shares in BP soared nearly 5% last week to 474p, after the group reported forecast-beating profits and pleased investors with a dividend hike.
One of the sectors with attractive investment opportunities is telecommunications, which Reid said is undergoing "genuine changes" in Europe. However, his top stock pick is UK-based ITV.
"ITV has had a really strong summer and it has benefitted from the improving economic environment," Reid said. "It is moving towards producing more programmes and globalising its product, and there is structural change in the business."
Its share price has climbed sharply since the start of the year, from 105p on 2 January to its current price of 194p.
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