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Frikkee profits from investors’ election fears

Frikkee profits from investors’ election fears

Election fears have allowed contrarian investors to make money, according to Smith and Williamson fund manager Tineke Frikkee.

The manager of the Smith and Williamson UK Equity Income Fund said she thought the FTSE was oversold on 7 May because of election fears.

She said: “I bought London house builder Berkeley Group on 7 May, as its valuation had become attractive on fears of a Labour-led government. Berkeley rose strongly and I sold out the following day, making 10 per cent.

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“After the Conservative win, I believed valuations of the more politically-sensitive utilities had risen too strongly, thus stretching valuations and I sold out of SSE and Centrica.”

Markets in housing and energy had been affected by Labour proposals to implement a mansion tax and a freeze on energy prices.

Ms Frikkee’s £45m fund had 12 per cent cash as at the end of April, which was gradually invested in existing holdings in early May, reducing cash to about 9 per cent, mainly through the re-introduction of Shell.

The fund is now running about 11.5 per cent cash, following profit taking resulting from recent market volatility.

Adviser view

Andrew Reeves, director of Midlands-based The Investment Coach, said: “For the kind of risk profiles that our clients have, the level of tactical allocation [that Ms Frikkee talks about] is not appealing. Our clients would want to participate in broad market moves rather than second-guessing an election.”