Just days after the election, Godber sees a sense of denial in fund management that it will have any tangible impact on portfolios, but he and Hamilton have remained alert to any changes in the value sphere.
“There is actually a change in the UK,” he says.
“But on the positive side I think this election marks the end of austerity, so you will get all parties talking about more spending, higher public-sector wages, more infrastructure spending and in the short term that’s good.”
On Brexit, the duo has always believed that it would “at best be a very difficult divorce”, and had their own reservations on the UK even before the turmoil of the June vote.
“At the launch of the fund we had outlined several concerns around the UK,” Godber says.
“The UK is experiencing a pay squeeze, wages have stalled after quite a long period of growing ahead of inflation and now the reverse is true and inflation is picking up.”
However, this squeeze does make it the place to be for value hunters with Hamilton and Godber finding value in domestic stocks while international-facing companies race ahead.
“International shares have done better than domestic since Brexit, and we all know the reasons why, so if you’re value you’re going to be hunting domestically,” Godber says.
Capital goods, materials and financials all feature highly in the fund’s portfolio currently, but healthcare and consumer staples such as Unilever are simply too expensive for the value team.
“The UK has some brilliant little niches in industrial manufacturing,” Godber adds.
“No one has given any government support to the sector in the last 40 years so what’s left is very good. They have had to do it on their own, they’ve had to deal with a strong currency so they tend to have high intellectual property, efficient and have been able to survive.”
