Dalton’s Nick Mottram remains cautious
Dalton Strategic Partnership’s Nick Mottram has said he will remain underweight financials in spite of their strong start to the year.
Mr Mottram, the former London-based head of equities at Investec Asset Management, who runs Dalton’s £5.4m UK-domiciled Melchior Global Equity fund, has said he is not looking to increase his 5.5 per cent exposure to financials at present.
“Even though financials had a pretty strong start to the year the fund has stuck to its underweight position,” he said.
The manager has no financials exposure in Europe and said even though banks are getting support he is still cautious.
“The ability for financial stocks to create wealth has been improved by central bank policy action, such as driving interest rates to record lows,” he said.
“This is allowing banks to make money on things like mortgages, but the issue is the activity levels are very low compared with what they were before.”
Mr Mottram said while there is an element of expected recovery in financials in the west, there is also the issue that the past decade was “quite abnormal” in terms of the positive credit cycle for corporates and consumers.
“Whether they will be able over the next few years to earn profits that justify the short-term share price movement is a moot point,” he said.
“If I see a sustained trend they will be more attractive to me as one of the aspects of my process is not to be too stubborn.”
Elsewhere, the manager has taken profits from some of his top 10 holdings including tech giant Apple.
The manager said he had noticed an increase in the volatility of Apple’s share price recently and so has taken profits from the stock, although it continues to be his largest holding at just under 2.3 per cent.
Mr Mottram said he bought Apple in the summer of 2010 at $280 per share and Apple last week was trading at $571.