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How Tineke Frikkee has overhauled S&W UK Equity Income fund
by Elsa Buchanan on Feb 12, 2014 at 07:00
Six months since taking over the fund from Charles Deptford, Frikkee has introduced an overweight in mining stocks at 7% of the portfolio. Key positions include Rio Tinto and recent addition BHP Billiton.
‘Rio Tinto has never been cheaper, but again it will never get to BHP Billiton’s multiples. They both make a return on capital but BHP Billiton has the most stable margins over time,’ she explained. ‘BHP Billiton has a strong balance sheet, good valuation and my sense is that it could meet and beat expectations in 2014, on the back of a rising global GDP growth.’
She takes the view that outflows from the bond propositions of both asset management arms ‘can be absorbed’.
She also views St James’s Place as a beneficiary of the advice gap, which some commentators argue has grown as a result of the retail distribution review as some high street banks and advisers withdraw from the market.
‘Even though they have been doing this for a long time, it has accelerated. Growth has really kicked in and beta has won, moving in line with the market,’ Frikkee said.
Insurance consolidator Resolution, which has a dividend yield of 7%, has growth potential in her view, although she does not anticipate further dividend rises.
Doubling bank allocation
She has nearly doubled her allocation to banks to 8.5%, notably with the introduction of a position in Lloyds, equating to 2% of the fund. Speaking ahead of Lloyds’ results, the manager expected the bank, which she bought this summer, to introduce a dividend later this year.
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- Rio Tinto PLC
- Bhp Billiton PLC
- Legal & General Group PLC
- St. James's Place PLC
- Resolution Ltd
- Lloyds Banking Group PLC
- Barclays PLC
- HSBC Bank PLC
- easyJet plc
- Marston's PLC
- Go-Ahead Group PLC
- National Express Group PLC