And while President Donald Trump has talked up energy independence in America, Bailey thinks he might also encourage competition on the global stage.
Aside from Royal Dutch Shell’s “overburdened” balance sheet, the firm’s attempts to sell off assets to maintain its dividend looked unsustainable to Bailey and Clark.
“We think it’s a short term fix that is not particularly inspiring,” said Bailey.
“The board are attempting to make asset disposals to reduce the company’s indebtedness but it is not a particularly good time to be selling assets.
“There was a recent study which suggests that for every 15 assets up for sale in the oil industry, there is only one potential buyer. So even if you do manage to sell those assets, you are not going to get the best price.”
Instead, the team are positive on telecoms, pharmaceuticals and companies that will benefit from increased infrastructure spending.
The conditions are right for a structural shift away from monetary policy and toward fiscal spending, Clark argued.
“On the short-term demand side, you give a man a job with a pay packet, he goes out and spends that money. And fiscal spending has a long-term effect on productive capacity of an economy.”
Alongside traditional housebuilders like Taylor Wimpey, Persimmon and Barratt Developments, the Macro Equity Income fund also contains the Kier Group, which specialises in road maintenance and has 40% recurring revenues, and Telford Homes, specialising in buy to rent properties.
Businesses which produce bulk commodities used in building and construction, like Rio Tinto and AngloPacific, are also key holdings.
In total, the fund has a 20% weighting in infrastructure spending.
