Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. 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 JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter