Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

JPM’s AA-rated star: Funding for Lending shift positive for housebuilders

JPM’s AA-rated star: Funding for Lending shift positive for housebuilders

John Baker, the Citywire AA-rated manager of the JP Morgan UK Dynamic fund, has argued that last week’s move by the Bank of England to refocus its Funding for Lending scheme away from mortgages is in fact positive for housebuilders.

Immediately upon the Bank’s announcement, shares in Taylor Wimpey fell by 7%, in Persimmon by 5%, and in Bovis by 8%.

‘The announcement could almost be seen as a positive because it suggests that the Bank of England views the lending recovery as self-sustaining and that is a positive indicator,’ commented Baker.

The manager therefore confirmed that he would maintain his 4% overweight position in housebuilders. As well as being invested in companies such as Barratt Developments and Crest Nicholson, Baker holds stakes in other businesses linked to the housing market, including FoxtonsCountrywide and Lloyds.

‘It’s important to bear in mind that housing affordability is still at seven to eight-year lows and, as a proportion of monthly income, capital and interest costs are only around a relatively reasonable 18%,’ Baker explained. ‘Additionally, the number of housing transactions forecast for 2014 is well below peak years.’

Baker also noted that the changes to Funding for Lending would not affect the Help to Buy scheme, which was providing the greater support to housebuilders.

Over the past three years, the JP Morgan UK Dynamic fund has returned 49% compared with 36% from the FTSE All Share index.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

John Baker
John Baker
71/161 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 18.29%
Citywire TV
Play Taxicab Tenner: AXA IM's Nicolas Trindade

Taxicab Tenner: AXA IM's Nicolas Trindade

After a summer break, it is the turn of AXA Investment Manager's Nicolas Trindade to give a £10 view of how fixed income is faring.

Play Wealth Manager Olympics: the Relay

Wealth Manager Olympics: the Relay

In the final round of the Wealth Manager Olympics, our intrepid athletes team up for the relay.

Play Wealth Manager Olympics: the Shot Put

Wealth Manager Olympics: the Shot Put

After busting a gut in the 100m sprint, our wealth manager Olympians displayed their brute strength in the shot-put.

Read More
Your Business: Cover Star Club

Profile: gearing up for the shift from consolidation to start-ups

Profile: gearing up for the shift from consolidation to start-ups

‘I think the industry is evolving rapidly, but not necessarily as a whole,’ says the head of recently launched Charles Nicholson AM

Wealth Manager on Twitter