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JPM's AAA-rated Ingram backs Help to Buy to drive returns
by James Phillipps on Mar 24, 2014 at 11:44
JP Morgan Asset Management is backing the government’s Help to Buy programme to continue driving the housing market.
Figures released by the government at the weekend revealed that 17,000 homes had been bought with the assistance of the scheme since it was launched nine months ago.
Guy Anderson, manager of the Mercantile investment trust, believes Help to Buy can help housebuilders to continue their strong run.
‘Although they’ve steadily climbed over the past two years (our positions pre-date this rise) there has been some stuttering in recent months amid question marks over the sustainability of the revival, as well as concerns over potential removal of government stimulus,’ he said.
‘We do not share this view, and expect the recovery to continue from here. We are keeping a close eye on all of these factors, but many of the house builder shares continue to exhibit the characteristics that we seek in Mercantile– attractive mid and small cap UK names where the outcome continues to beat expectations.’
AAA-rated Jon Ingram, manager of the JPM UK Dynamic fund (pictured), points to the extension of the equity loan scheme being designed to support the construction of 120,000 new homes and plays down concerns about a renewed housing bubble. He is also continuing to see opportunities in housebuilders and remains overweight the sector. He is also playing the housing theme through indirect means.
‘Now with this extension of the Help to Buy scheme we have continued support for consumers to climb the housing ladder,’ Ingram said.
‘The government helping to subsidise demand will continue underpinning prices. Meanwhile, UK supply is not keeping pace, which is another technical factor supporting prices. Housing transaction forecasts for this year are still well below peak, mortgage rates have come down and capital and interest rates are reasonable. On the balance of that, we’re sticking with the housebuilders.
‘Two shares that we like for playing the house builder theme indirectly are Countrywide, the UK’s largest estate agency and lettings network and Lloyds Banking Group, which should be well positioned to grow its revenue in line with higher mortgage volumes whilst bad debts should decline as house prices improve.’
The JPM UK Dynamic fund is up 48.28% over three years, compared to a 31.19% rise by the FTSE Allshare.
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As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
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