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Chris Burvill: FTSE at 7500 by year-end ‘absolutely achievable’

by Robert St George on May 22, 2014 at 11:38

On the bond side, Burvill warned that there isa risk of gilts tumbling later this year, which could boost equities if money is reallocated from fixed income.

‘At some stage it is more likely we will get a rogue higher inflation rate,’ he said. That would also stoke fears of an interest rate hike, further hurting gilts. As a hedge against such an eventuality, Burvill has placed 9% of his £1.7 billion Henderson Cautious Managed fund in index-linked bonds.

On the equity side, Burvill said there is still ‘cracking value’ available in the FTSE 100. He cited Tate & Lyle as a ‘classic example’ of a stock valued only on current earnings, which overlooked the latent potential of its management and business.

Burvill similarly pointed to Rolls-Royce. ‘It’s fine to value it on current earnings, but don’t ignore the R&D going into the next generation of engines.’

Both have fallen by double-digit percentages since January after profit warnings, yet Burvill maintained that such companies could help the FTSE hit 7,500.

‘Mathematically it only needs a few of the large-caps to outperform,’ he concluded.

Burvill, A-rated by Citywire, has returned 26.6% over the past three years through Henderson Cautious Managed, a top-quartile performance compared with an average of 15.1% from its IMA Mixed Investment 20-60% Shares sector.

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