Premier's Fulcher: why aircraft leasing is a great alternative

Premier’s Fred Fulcher has been backing aircraft leasing, reinsurance and infrastructure for private clients as doubts hang over whether the recent equity rally can continue.

Fulcher, who heads up the firm's discretionary service, is unconvinced the so-called "great rotation" from bonds to equities is finally underway and is also finding bonds expensive, so has been fishing for alternative assets.

‘Is it sustainable? Probably not. I think it’s too early to say we are at the start of a bull market. The big global issues like Europe and the fiscal cliff in America, the tin has just been kicked down the road and those issues are still with us.

‘Gilts look incredibly expensive, high grade bonds look expensive, so you have to look for alternative types of assets,’ he said.

He cites specialist company Doric Nimrod Air 2 as an asset that can still provide steady and predictable returns through 2013.  

‘It’s a company that leases A380 aircraft to the Emirates airline. So we are looking at the cash flows coming through from a secure company like the Emirates – it’s a very strong company.’

On the collateralised reinsurance side, he has been buying CATCo and for an alternative gilts, he likes GCP Infrastructure.

‘GCP is a company which gets cash flows primarily from public private partnership infrastructure project so they’re government backed but yielding higher than gilts.’

These are example of products we believe will give strong cash flows, good income and in the event we don’t get capital growth over the rest of the year at least we are getting income flows coming through.’

Premier’s discretionary portfolios have been cautious over the last year, with a good deal of diversification. Fulcher has positioned portfolios with a ‘huge range’ of structured products including autocalls, defensive autocalls, range accruals, call spreads, capped call spreads and volatility plays.