Felix Wintle has said his Neptune US Opportunities fund had seen modest inflows in the past month, after it more than halved in size following “not great” performance in 2011 and 2012.
At its peak at the end of March 2011, US Opportunities was £731m in size, before dropping by more than 50 per cent to a low of £354m at the end of January this year, according to data from FE Analytics.
But since then assets have increased slightly, and the manager said the fund had seen £14m of inflows since the end of July, putting it at roughly £415m.
“We went through a period of not great performance during the past few years. 2011 was a bad year and 2012 was not fantastic,” he said.
The fund has produced top-quartile returns within the IMA North America sector in one- and five-year timeframes.
But its 9.3 per cent loss in 2011 and third-quartile return in 2012 mean its three-year numbers are third quartile, according to FE Analytics.
Mr Wintle said the fund was starting to see a boost from the so-called “great rotation” from bonds into equities.
He was also bullish about the levels of merger and acquisition (M&A) activities stating the trend was “definitely back,” and cited the example of one of his biotech holdings, Onyx Pharmaceuticals which was bought by Amgen at a 43 per cent premium.
“I think there is a lot of M&A to come – it can happen anywhere,” the manager said, adding that the key sectors he is watching are healthcare, technology and biotechnology.
While he acknowledged that some sectors of the US looked expensive, the manager said growth momentum was key now that the economy was getting back on its feet.
“Valuations are not the be-all and end-all,” he said.
“Sometimes they are very important but they are less important now because we are in this growth recovery phase.
“People don’t buy the market because they say it’s done too well or it’s too expensive, but it keeps going up. We are really bullishly positioned.”
Mr Wintle said he was overweight more economically-sensitive areas of the market such as technology, financials and consumer discretionary, while retaining an underweight exposure in more defensive areas such as energy and utilities.
He noted that “some parts of tech are extremely expensive,” but that investors are willing to pay for future growth, which is why the market is performing well.
The fund’s highest sectoral weighting is 19.8 per cent in financials, but unlike peers, Mr Wintle said he had avoided regional banks as he viewed them as “significantly more expensive,” than other banks.
“These banks had a decent rally in 2013 but have started to go sideways, ” he said.
Instead, the manager holds investment banks Morgan Stanley and Citigroup, which he said were on a price to book level of 0.8 compared with 1.2 for regional banks.
The price to book measure is a valuation ratio which shows the price of a security compared to the tangible assets reported in the company’s balance sheet.
Why Felix Wintle thinks the Federal Reserve was wrong not to taper
Federal Reserve chairman Ben Bernanke “missed a bit of a trick” by choosing not to curb its asset purchase programme, known as quantitative easing, earlier this month.
Although the manager said he was geared towards more cyclical parts of the market, he noted that risk assets had not risen on the news. “The decision not to taper is an interesting one because you might have expected the market to continue going up or even spike higher given everyone was expecting less quantitative easing [and this was an] extension of stimulus,” he said.
“The equity market was significantly higher last Wednesday than it was on May 22 [when Mr Bernanke first mentioned tapering]. The market would have accepted tapering,” he said, adding that the decision not to had prompted suspicions that the US economy might not be as strong as investors perceive
