According to Shah, valuations on many stocks and sectors are looking attractive when compared to those in the 1993 bear market on a price to book basis.
He believes the equities trough has not yet been reached but renains confident in the strength of underlying fundamentals. He says: “In this environment, I’m increasing my exposure to financials with a basket of banking stocks to spread the risk. I also like other non-bank financials such as Provident Financial and I am overweight financials overall.”
Shah is also bullish on consumer services and is overweight in technology stocks. He says: “I am always attracted to potential bid targets and it is likely that merger and acquisition activity will pick up in 2009.”
The £2bn FIF special situations fund remains first decile over Shah’s 11 month tenure to the end of November 2008, according to figures from Morningstar.