EquitiesApr 8 2014

Martin Currie’s Tom Walker ups stake in financials

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Martin Currie’s Global Portfolio Trust manager Tom Walker has boosted his stake in financial stocks, taking him to a neutral stance on the sector.

Mr Walker, who has run the £170m trust since 2000, said he had recently added to several banks, mainly in the US, as he saw stock-specific opportunities to take him from a 10 per cent underweight stance to a neutral position in financials.

The manager has put money towards Japanese financials, including Mitsubishi UFJ, which he said had been “growing assets and leveraging up”, as well as several US stocks.

“About 18 months ago I was still not hugely positive on [US financials] but AIG has got the government off its shareholder register now and I felt JPMorgan had slightly underperformed recently and so I think it is quite good value.”

But Mr Walker said he remained cautious about European banks. He had only held a Norwegian bank recently and had avoided those in the so-called periphery countries of Spain, Italy and Greece.

“Non-performing loans are still growing and loan growth is non-existent,” he said.

“There is lots of hope for a share price recovery but I am nervous about what the European Central Bank will do when it conducts stress tests on the continent’s banks.”

The manager referenced UniCredit, Italy’s largest bank by assets, which announced last month its largest ever loss in Q4 2013 after making a €9.3bn provision to cover bad loans.

Mr Walker said US banks had written off far more of their bad debts than their European counterparts, which made them more compelling investments now.

“My view is European banks can’t afford to recognise all of the problems,” he said. “The US was very quick to come in and sort the problems out.”

In 10 years, the trust has delivered a second-quartile return of 161.9 per cent against the AIC Global sector’s 150 per cent and has outpaced its FTSE World index’s 131 per cent, according to data from FE Analytics.

In September last year, Mr Walker stepped back from the underperforming £200m North American fund he ran with Penny Kyle.

Ms Kyle, who started working on the fund in September 2012, is now lead manager on the fund with Edward Wotherspoon, the fund’s investment manager.