This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM-Cover-Top-140718.jpg
Categories:Investments

UK banks could still go bust, warns Investec's Mundy

  • Print
  • Comment

Investec’s contrarian investor Alastair Mundy says he is staying away from UK banks as there is a risk they will go bust.

Mundy, who runs the £487.7m Investec UK special situations fund, says the only bank he holds is HSBC because it has large levels of deposits with not many loans and a solid balance sheet.

Mundy says: “Banks are cheap but they could be nationalised and there is a significant risk of this happening. Banks have got value trap characteristics. They have a 50 per cent upside and a 100 per cent downside.”

He says if credit markets seize up again, there is a risk a number of banks will go bust.

Mundy, who also runs the £2bn Investec cautious managed fund, has increased Japanese equities from 3 to 8 per cent in the fund over the last 12 months.

He says: “For the last 20 years, Japanese equities rarely looked cheap and everyone has lost interest in Japan. It has problems with government debt and immigration and a lot of bad news is in the share prices.”

But Mundy says he has been adding to Japanese exporters that have the chance to benefit from a weakening yen.

He says: “I have been investing in those that are struggling due to the strong yen as the yen looks overstretched.”

Hargreaves Lansdown investment analyst Richard Troue says: “Using banks is a long-term investment theme. To trade in and out with a short-term view is very tricky.”

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Taxbriefs Advantage
Advantage is a digital reference source giving unbiased, independent, answers to your technical queries. Subscribe to Taxbriefs Advantage.

Have your sayEdit my profile/screen name

You must sign in to make a comment

The Cost of Advice

Sponsored by Brooks Macdonald

Fund Data

Editor's Pick



Poll

Would you vote in favour of Scottish independence?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments