View more on these topics

Manager focus: Ian Henderson

With banks in America starting to report near record profits, some investors are starting to wonder whether it’s time to start looking at the sector once more.

Ian Henderson, manager of the JP Morgan Global Financials Fund, says the recent news out of American banks, including paying back government bailout money, gives investors reason to be positive.

“I think at the end of the day the ability of some of the participants of the Tarp [Troubled Assets Relief Program] to pay it back is a strong signal of things turning around,” he says. “It’s quite interesting to think that there have been cases in the past where companies have been helped out [by governments] which in the end were hugely profitable.”

Henderson says he is supportive of the extraordinary actions taken by central banks to avert a systematic failure in the financial system, as a run on the banks similar to that seen in the 1930s “would have caused unimaginable chaos”.

He is less supportive of credit rating agencies, who have been vilified in the press for their perceived failure to identify the risks of some asset classes. Henderson says that they did play a part in the origins of the crisis.

“[Ratings agencies] are there to think outside the box, but they were slow to realise the interdependence of many different factors,” he says. “I think at least for the time being the complacency of relying solely on ratings agencies has gone. The issue really is whether they should have any liabilities for their decisions, like in accounting.”

Henderson says if they had been subject to legal controls and were held accountable for the credit deterioration then it is unlikely they would have remained in business.

The panic in the market following the collapse of Lehman Brothers in September last year meant that picking the strong banks from the weak, in terms of off-balance sheet liabilities, became a difficult task. Henderson says the fund suffered because he could not run an un-invested portfolio despite the collapsing share prices across the sector.

Since March, however, financials have rallied strongly and the fund is up 67.05% from trough on March 9 to July 16. Signs that credit markets are starting to thaw, albeit at a modest pace, have given investors hope that a price can be found for so-called ‘toxic’ assets sitting on banks’ balance sheets.

“I’m sure write-ups will happen,” says Henderson. “This process of revaluating underlying value will continue, but it’s a difficult task. A lot of these assets have got fairly long lives, but as time goes by things will become clearer about who needs to pay and who doesn’t.”

He says he modestly increased his exposure to American banks in May and has full confidence that they will return to “reasonable margins” in the near future.

“Coming back down to earth is necessary as hopefully the boil has already been burst,” he says. “You’ve got to be prepared to buy these developed market banks because there will be a banking system so they will survive.”

Related Articles:
Manager focus: David Dudding
Manager focus: Chris Price


Legg Mason launches Global Blue Chip fund

Legg Mason has launched a Global Blue Chip Bond fund for its fixed income affiliate Western Asset Management. Dipankar Shewaram and Mike Buchanan will run the fund from their office in Pasadena. It will invest in what the managers deem to be pure investment grade, high quality companies which they say are trading at historically […]


Retirement realities

MGM Advantage, Living Time, Partnership Assurance, LV=, Canada Life, Hargreaves Lansdown and Bluefin have joined forces to form a new group to lobby for change in the retirement sector.


Aifa tells Tories access to advice is crucial

The Association of Independent Financial Advisers has warned that the Government and regulator must increase consumer access to trusted sources of advice, following yesterday’s Tory white paper.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm