Clark says he has been adding to his position in Centrica, which was 3.2% of the Income Plus Fund at 30 April, in the belief that a recent statement to the market that detailed rising energy costs was viewed overly negatively.
“The IMS was seen as negative, but I felt this was a buying opportunity. Centrica still has a very strong business model and is producing dividend growth. It will be able to pass on wholesale prices in time”.
Clark is also looking to high-end insurers in the wake of the string of natural disasters that have had an impact around the globe since the start of the year. “You look at the number of disasters to have taken place in 2011 and it looks as though the year’s at its end. But if we get a major hurricane over the summer then there will be a lot of push for insurer and reinsurer business.”
Clark believes insurers such as Lloyd’s will be able to “avoid the worst of the costs” because of their superior underwriting skills.
The manager, who also runs the £254m Fidelity Moneybuilder Balanced Fund, says his more defensive portfolio has benefited from what has been “quite a run” of late, but still sees value in defensive sectors with healthy cashflow, such as telecoms, tobacco, supermarkets and non-life insurance.
“We were overdue something like this; I would have expected it in March. But there is still some way to go for some of the undervalued names”.
“There has been a shift in sector leadership, from mining into more defensive names. But many are still very cheap fundamentally, and on very low earnings multiples relative to history and to the market. I still see good value, particularly in pharma but also in telecoms and to some extent supermarkets.”
