M&G Recovery's Dobell picks his five recovery winners

M&G Investments star fund manager Tom Dobell (pictured) has cast doubt on whether financial firms are committed to improving shareholder value.

Citywire AA-rated Dobell, who has largely avoided investments in the financials sector for the past five years in his mammoth M&G Recovery fund, has no plans to turn positive on financials in the near future.

He told Citywire: ‘I remain concerned about the opacity of financial balance sheets and the commitment of the management of many of the UK banks to improving shareholder value.’

Financials represent Dobell’s largest underweight position, accounting for 8.6% of the £5.4 billion Recovery fund, with HSBC taking more than half of this exposure at 5%. He is finding far more opportunities in the oil and gas sector, which has a weighting of 20.7% in the fund.

BP is the fund’s biggest holding at 6.1% with Citywire shrewdie tip Tullow Oil also in his top 10 holdings. 

He admits his bearish stance was of detriment to the fund at the start of the year when banks outperformed as quantitative easing starting to work and improved sentiment in the sector. 

However, despite this blip, Dobell remains one of the UK’s strongest fund managers with his performance across a range of market cycles underlining his talent.

According to Lipper,in the five years to the end of August he has returned 53.2%, more than double the 22.7% gain on the FTSE All-Share. His maximum drawdown was -36.7%.

Dobell typically holds stocks for around three to five years. Positive contributions to the fund have come from a variety of businesses, which has helped compensate for missing the financials rally.