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Julian Gibbs

Higher oil prices and political uncertainty mean that the UK equity market is suffering from the summer doldrums, not helped by higher interest rates. But some of the bigger companies – as well as many smaller ones – are undervalued, taking into account their future potential profits. Some, such as banks, have exceeded forecasts by considerable margins.

I believe that in current stockmarket conditions, investing in undervalued shares could prove very profitable. I particularly like Edward Bonham Carter&#39s Jupiter under-valued assets fund, which is AAA-rated by S&P.

The fund&#39s performance since launch has been excellent relative to the market although recently it has lagged a bit. However, I now believe that this fund will recover more quickly than most other funds and over the next one or two years should show good returns for investors.

About a quarter of the fund is invested in financials, with a further quarter in cyclical services. The balance is spread mainly between non-cyclical services, basic industries, natural resources, non-cyclical consumer goods and general industrials.

Some of the bigger holdings include Bank of Ireland, Lloyds TSB, Prudential, BP and Shell, all of which are expected to continue benefiting from current market conditions. I recommend this fund as part of any UK equity portfolio.

Jupiter Asset Management under Bonham Carter&#39s skillful leadership and talent for attracting top investment managers is now quite rightly one of the most popular fund management groups with IFAs. The other Jupiter funds I particularly like in the current environment are financial opportunities, fund of investment trusts, European special situations and the other European unit trusts.


Out of context

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ABI director general Mary Francis says she believes pensions commission chair Adair Turner will recommends the Government adopts compulsory pensions in the workplace. The pensions commission was established after a Government white paper on pension reform issued in 2002.

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David Aaron banned for life

The FSA has cancelled the permission granted to David M Aaron, personal financial planners, for life for mis-selling structured capital at risk products (scarps). The FSA says the firm mis-sold a substantial number of scarps between January 1998 and June 2003, and its internal risk assessment process was fundamentally flawed. The regulator says financial promotions […]

Cricket - thumbnail

England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.


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