Wealth Manager - the site for professional investment managers

Register for full access to Citywire’s Fund Manager database, news and analysis. Registration is free and only takes a minute.

Why recent IPO flurry worries Julie Dean

Why recent IPO flurry worries Julie Dean

Cazenove UK Opportunities manager Julie Dean believes the time is ripe to move out of cyclicals into more defensive stocks. 

The Citywire AAA-rated fund manager cited the recent flurry of IPO activity as one potential warning sign of froth in the UK market. She highlights the recent IPO of AO, online white goods retailer, as one such example, having floated at a high valuation of around eight times sales and 150 times earnings. 

‘Despite that very high initial valuation, the shares traded at a 40% premium. It shows you the money to be put to work in the market and appetite for equity,’ Dean (pictured) said at a conference. 

With this in mind, she noted: ‘As we tilt our portfolio structurally, we are likely to take handsome profits on cyclical companies and will look to re-invest in businesses with more stable earnings where valuations look relatively more attractive,’  

Nonetheless, she still takes the view that equities are in a sweet spot if investors take a long-term view, particularly as inflation remains relatively low. Selectivity will prove key now though, she said. 

Dean describes the statistic that more than 80% of stocks in the FTSE 350 went up in 2013 as an ‘astonishing directional move'. Looking ahead, she expects to see a reversion to mean in terms of equity price performance. 

Much will depend on whether genuine earnings growth now comes through to support valuations, she commented: ‘The good news and this is genuinely important, is that unlike the economic revival that we tentatively started to see in 2010, recovery is now supported by a pick-up in fundamentals.’ 

She is particularly positive about signs of businesses started to invest in capex.

In the three years to 6 March Dean returned 75.6% on the UK Opportunities versus a 30.4% rise in the benchmark.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Investment Pulse: the highs and lows of 2014

Investment Pulse: the highs and lows of 2014

This week's Investment Pulse looks back at some of the biggest stories of the year as well as looking forward to 2015.

Play Inside ETFs: Why the US bull-run still has legs

Inside ETFs: Why the US bull-run still has legs

Global equities suffered a sharp sell-off in the third quarter but exchange traded fund investors are continuing to back the US to outperform in 2015

Play Paul Niven: I won't rip up the Foreign & Colonial Trust history book

Paul Niven: I won't rip up the Foreign & Colonial Trust history book

The newly appointed manager of the Foreign & Colonial trust talks about his plans for UK's oldest investment company.

Your Business: Cover Star Club

Manchester wealth firm hires Coutts director for London launch

Manchester wealth firm hires Coutts director for London launch

Former Coutts director Tony Robinson has joined Chartered Wealth Management to head the company’s newly opened London office.

Wealth Manager on Twitter