The manager has increased the £46.5m Old Mutual Equity Income Fund’s allocation to consumer-facing businesses by around ten percentage points since the start of September. Meanwhile, exposure to industrial-focused stocks has been cut by about 5 percentage points.
“At a point where industrial businesses are just starting to struggle a bit more relative to expectations having had a great few years, consumer businesses, having had a tough few years, are just starting to see life get a bit easier,” he said.
Message, who was recently named rising star of the year by S&P Capital IQ, has started new positions in budget airline easyJet and US-focused jewellery business Signet. They each account for around 2% of the portfolio.
EasyJet was added as its valuation appeared to be cheap to the manager, while the airline’s move to introduce allocated seating could allow it to increase sales to business travellers. Signet is a play on the improving consumer confidence being seen in the US.
Cruise ship operator Carnival has also been bought as the manager expects the firm to display better-than-expected pricing power owing to a shortage of new vessels coming online across the industry. The stock has an allocation of about 1.5%.
“Real consumer disposable income is starting to improve because inflation is beginning to be more benign and consumer confidence is getting a bit better,” he explained. “People just generally have a bit more money in their pocket compared with last year.”
The additions to Message’s consumer-facing allocation came as the manager reduced exposure to industrial names. The fund has sold out of its positions in conveyor belt manufacturer Fenner and precision instrumentation firm Spectris.
“What we’ve seen in the last few months is industrial businesses slightly disappoint relative to expectations across the world,” the manager said. “So having been generally happy on that sector for quite a few years, I’ve been selling down some of my industrials exposure.”