SW Mitchell Capital has launched an all-cap UK equity fund that will focus on companies benefiting from the domestic recovery.
The SWMC UK fund will be managed by Brian Cullen, who has been the firm’s UK specialist for four years, working alongside Citywire A-rated Stuart Mitchell (pictured) on his pan-Europe strategy.
‘Similar to the positioning in our broader European strategy, the core of our UK portfolio is in those companies exposed to a domestic recovery,’ explained Cullen.
‘While many domestically oriented stocks have done very well over the past 12 months, we believe the market continues to underestimate the recovery in a number of areas – such as homebuilders and banks.’
Cullen acknowledged worries that such stocks have already been re-rated, but argued that they could still deliver ‘years’ of high returns.
‘While these companies are no longer trading at no-brainer valuations, as we saw with Lloyds 18 months ago, the market is still not pricing in the opportunity for substantial bank lending growth, which would be a powerful driver of returns.’
He confirmed that he would avoid large multinationals such as Unilever, Diageo and SABMiller, though. ‘While these are great franchises, valuations are not cheap enough to tempt us back given the potential headwinds in some emerging markets.’