Ben Yearsley, head of investment research, Charles Stanley Direct
Mr Yearsley says he is bullish on parts of the sector, such as asset management and insurance, but adds that banks are “going to be much more of a low-growth sector.
Invesco Perpetual Global Financial Capital Fund
“Paul Read and Paul Causer have been vocal in their liking of financial bonds, often arguing that the sector has excellent value. Mr Read and Mr Causer form one of the premier bond teams in the industry, and they have shown excellent judgement over time in backing certain sectors.
“This is predominantly a bond fund, although there is a 23 per cent weighting towards financial equities; the mandate allows it to reach 40 per cent. As much as 88 per cent of the fund is currently in banks, with the remaining 12 per cent in insurance. Unsurprisingly, the fund currently yields close to 7 per cent.”
Polar Global Insurance
“Mannaged by Alec Foster and Nick Martin, this concentrated portfolio aims to benefit from a wide range of insurance assets, including commercial, reinsurance, insurance brokers, retail, multi-line insurance, life and health, and Lloyd’s.
“Mr Foster has managed insurance funds for a long time - the Hiscox Insurance Fund was merged into this fund when he joined Polar.
“Some segments of insurance do well in a rising rate environment, whereas others may be more weather-dependent, such as catastrophe insurance. This is an interesting fund that is not a banking fund, unlike so many other financial funds.”
Ben Willis, head of research and investment manager, Whitechurch Securities
Mr Willis identifies an investment trust that offers an interesting alternative to some of the mainstream, open-ended funds available to all retail investors.
Polar Capital Global Financials Trust
“This investment trust was successfully launched last month and managed to raise more than £150m. Polar Capital already runs funds in the financial sector, and they have drawn upon the experience of John Yaks and Nick Brind to run this trust.
“The trust will seek income and growth returns, but the discount mechanism and the ability to gear make this an exciting alternative to holding an open-ended fund.”
Jupiter International Financials fund
“I have opted for this fund over its larger, more established stable-mate. It is managed by the same team at Jupiter - Robert Mumby and Guy de Blonay - but it has a broader remit, in that it can invest a limited amount of the portfolio in other assets at the discretion of the managers.
“This flexibility also extends to its regional exposure, as the managers will actively seek opportunities in Asia Pacific and emerging markets financial companies if deemed appropriate.”
