Equities neither cheap nor expensive, reveals L&G
Opportunities exist to snap up shares that will expand quicker than the economy as equities are found to be neither cheap nor expensive, according to L&G's Richard Penny.
The senior fund manager of the UK Smaller Companies team and manager responsible for the Alpha UK Trust said investment levels had improved and that the economy was progressing due to fiscal stimulus and low interest rates.
"Equities are neither cheap nor expensive, and that usually happens in eight or nine years out of 10 in the stock market," he said.
The manager said companies such as BP, Shell, GlaxoSmithKline and AstraZeneca were all offering attractive yields of around 4 per cent and that shares were therefore fairly valued.
"But some shares have been left behind, and others will grow more than the economy at large," he said.
Mr Penny's portfolio is now split 60 per cent between deep value names that are in recovery or refinancing and 40 per cent in companies with strong sales growth.
He said: "Last year, there were a number of non-household names that offered growth or deep value. We had lots of little firms that added value."
In terms of growth companies, Mr Penny is looking for companies that have new ideas, perhaps in a product or service.
The manager has invested in a hedge fund administration firm called Globeop Financial Services.
The company has seen increased trade since hedge funds started to recover, subscriptions increased and demand for independent diligence boomed in the wake of the Bernard Madoff scandal.
