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McVeigh: Global investors cannot afford to overlook the UK recovery
by Robert St George on Sep 12, 2013 at 09:10
‘Holding stocks exposed to international winners has been a successful strategy while the UK economy has been in the doldrums,’ McVeigh (pictured) conceded, ‘but things have changed.’
His confidence about the domestic outlook is premised on the return to health of the country’s banks, the resilience of private-sector employment, purchasing managers’ indices beginning to indicate expansion, and the introduction of policies such as Funding for Lending and Help to Buy.
‘These factors were to some extent overlooked by market participants in the early stages of the recovery,’ said McVeigh. ‘In our view, global investors cannot afford to ignore them any longer.’
To exploit these trends, McVeigh has devoted more than half his portfolio to the primarily domestic banking, retail, housebuilding and media sectors.
A typical holding is Dixons, which McVeigh observed had been ‘written off as the next HMV a couple of years ago but is now benefiting from its own restructuring, the demise of some major competitors and a strong technology product cycle’. The chain’s share price has risen by 143% over the past year.
By backing such companies, McVeigh contended that he had ‘been able to participate more fully in the UK recovery’. His fund has been a top-quartile performer over the past year – as well as on three, five and 10-year views – with a total return of 31% compared with an average of 20% from the UK All Companies sector since last September.
Equally McVeigh has profited from a lack of exposure to the energy and mining industries, which depend on international growth; they account for a combined 21% of the FTSE All Share index, but just 4% of McVeigh’s portfolio.
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on Dec 06, 2013 at 14:28