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Downgrades don’t put Schroders off banks

Schroders fund manager Nick Kirrage is sticking with UK banking stocks in the firm’s £733.7m income maximiser fund despite Moody’s downgrades last week.

Kirrage, who manages the income component of the income maximiser fund, says the fund has a 2 to 3 per cent holding in each bank.

He says: “We own RBS, Lloyds and Barclays. At half book value, we are compensated for the risks of exposure to UK banks. Lloyds is a very cheap stock. We think we are going to get strong dividend growth from Lloyds because, historically, banks pay half their profits as dividend. We can expect a yield of 10 per cent.” Kirrage says he expects banking stocks will return to the dividend register in the next three years.

Odey Asset Management absolute return fund manager James Hanbury also sees value in UK banks.

He says: “We have increased our exposure to Lloyds convertibles. They give a 14 per cent yield to redemption and a 10 per cent running yield and we think the risk return on those is extremely attractive. We are close to 10 per cent in those, up from 7 per cent in June.”

On Thursday, Fitch Ratings downgraded Lloyds Banking Group and Royal Bank of Scotland to “A” after revising its support rating floors for “systemically important UK banks”.


Ex-FSA director Waters heads new trade body

Former FSA director of conduct risk and asset management sector leader Dan Waters is to head up a new trade body representing global investment funds and their managers. ICI Global will focus on regulatory, market and other issues for global investment funds, and its members will include regulated US and non-US based funds publicly offered […]

First State appoints Richard Wastcoat as non-exec

First State Investments has appointed former Fidelity chief executive for the UK mutual funds business Richard Wastcoat as its first non-executive director. Wastcoat, who joins with immediate effect, spent 25 years at Fidelity. He was chief executive of its UK mutual fund business, and subsequently, FundsNetwork, from 1999 until his retirement in 2008. Other roles […]

Cann: Minimum standards are not enough

The Institute of Financial Planning says membership of the professional body is about adhering to its code of ethics, not just being provided with a statement of professional standing. The IFP was among the first six organisations to be formally approved as an accredited body last month. Accredited bodies are responsible for issuing advisers with […]

Identifying best-in-class UK stocks — Mark Martin, Neptune UK Opportunities Fund

FE Alpha Manager Mark Martin assumed management of the multi-cap UK Opportunities Fund at the beginning of February. As manager of the highly regarded UK Mid Cap Fund, Martin has begun restructuring the new portfolio to focus on our very best UK stock ideas from across the FTSE All-Share Index. In this video, update Martin addresses:

– Themes informing the UK Opportunities Fund
– The multi-cap structure of the fund
– UK equity valuations


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