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JOHCM UK Equity Income
by Nisha Long on Jan 27, 2014 at 12:18
JOHCM’s Beagles and Lowen snap up miners to gain cheap exposure to emerging markets
JOHCM UK Equity Income co-managers Clive Beagles and James Lowen have been buying into the beaten up mining sector as a cheap way to gain exposure to emerging markets.
The Citywire AA-rated pair have been using the proceeds from the sale of a number of mid-caps they exited because their share price performance had driven down their dividend yields.
Beagles told Citywire Selection: ‘We have been forced to take profits because of our strong yield discipline and the mid-caps have suffered on this front.’
The duo sold out off Marshalls, WS Atkins and Close Brothers. They recycled the money into miners, the first time in four years the managers have put money into the sector.
Beagles and Lowen previously only held GlencoreXstrata, which was taken out of the portfolio before the merger. They recently bought into Rio Tinto, contributing a 6% weighting to natural resources in the £2.4 billion fund.
‘We want some emerging market exposure so Rio Tinto gives us that. The company is under new management and has a very good bottom-up capital discipline at work,’ Beagles said. ‘We have seen a material shift in mining and the use of iron ore is a function of global and Chinese GDP trends, which are both improving.’
Financials remain the managers’ largest sector bet where they maintain a large overweight. However, these holdings have not all been successful.
Beagles sold out of RSA last summer as the company came under pressure from the Irish regulator.
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