UK equity income managers have been adding to bank stocks off the back of improved liquidity created by the European Central Bank’s long-term refinancing operations.
F&C fund manger Phil Doel, who runs the £206m UK equity income fund, sold some exposure to defensive stocks in the last three months and added to banks.
He has bought LloydsTSB as a new holding of just over 1 per cent and topped up his position in Standard Chartered from 2.5 per cent to 3.7 per cent.
Doel says: “I have taken exposure out of the more expensive consumer defensives where earnings downgfrades were starting to come through that were not priced in. The impact of the ECB’s long-term refinancing suggests a reduction of tail risk with the banking sector.”
BlackRock portfolio manager Adam Avigdori, who runs the £736m UK income fund, also sees an opportunity in banking stocks. He bought new positions in Standard Chartered at the end of last year and Barclays this year.
Investment Quorum chief investment officer Pete Lowman says he prefers UK equity income managers to have only a small exposure to banks. He says: “If they are exposed, I prefer it to be to banks such as HSBC and Standard Chartered which are less exposed to Europe.”