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+small+181214
Categories:Investments

Mundy: UK banks are "value traps"

  • Print
  • Comment

Investec’s fund manager Alastair Mundy, who runs the £487.7m Investec UK special situations fund and the £2bn Investec cautious managed fund, says he is staying away from UK banks as there is a risk they will “go bust”.

Mundy’s only bank holding is a 6.7 per cent position in HSBC within his special situations fund. He says that this is because HSBC has lots of deposits and not many loans and a solid balance sheet.

Mundy says: “Banks are cheap, but they could be nationalised. There’s 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 that if credit markets seize up again, there is a risk that banks will go bust.

In contrast to other managers, Mundy says he does not see really cheap valuations in the equity markets.

He says: “Average PEs at the moment are not great or briliant. US corporate profitability has never been higher. People have been sacked, tax and interest rates are low. Tax rates are going to go up, as are interest rates. If companies are making too much money, other companies go in and overcut them.”

  • 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.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth


Fund Data

Editor's Pick



Poll

Two years on from the RDR, do you think consumers are better off as a result?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments