Top manager loads up on banks

Top manager loads up on banks

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One of Britain's top fund managers has dramatically increased his fund's exposure to banks, both UK and overseas, believing the sector's rally has still further to go.

Citywire AA-rated Philip Gibbs, manager of the top performing Jupiter Financials Fund, has increased his weighting to banks to about 62.5% of the fund. Gibbs is a punchy investor and concedes that there are still problems ‘lurking’ in the sector.

‘I would recommend people to have very substantial exposure to banks if they believe in equities over the next few months. The run could go a very long way. We are down over 50% in global financials and the numbers are very compelling. If the sector returns to normal valuations it will stage a significant rally of more than 20% and individual stocks could do very well.’

Gibbs’ top fund holding is Barclays, at about 7% of the £1.3 billion fund. JPMorgan Chase, Bank of America, DnB NOR and HSBC made up the top five holdings at the end of July. ‘I have a bias toward investment banks because they have better capital and are at an early stage in the investment cycle. There is a general recovery in the world and we believe it will continue. If it does, share prices will continue to rise because people are still very defensive on financials but valuations are historically low.

He believes the Barclays acquisition of Lehmans made the UK bank an even more attractive proposition.

‘Once you get past the “this is a crisis” mentality, 1.2 times for Barclays looks too low,’ Gibbs said.

He picked the bank as ‘a bit of a winner from the credit crunch’ compared with UK rivals Lloyds and Royal Bank of Scotland – although he conceded that with governments and central banks looking to take away fiscal stimuli in the next few months, problems remained further out.

‘Lloyds is a microcosm of the banking sector. It is a very leveraged play on the UK consumer but still has some very horrible problems, especially in commercial property. It is still undercapitalised and is still wrestling with the issue of paying a huge premium to the government. I prefer HSBC and Barclays.’


Gibbs has proved himself able to get the macro calls right time and time again since the fund’s launch on 1 July 1997, making the fund the best performing open-ended fund over the time period.

He is the only UK fund manager to have been continuously rated by Citywire over the 85 months of ratings coverage with 56 months of AAA-ratings, 26 of AA-ratings and four months of A-ratings.

Since Jupiter Financials Opportunities was launched it has also trounced the opposition in the IMA Specialist sector. The fund has returned 864.5% since inception to the end of August, comfortably ahead of its nearest challengers in the sector, BlackRock Gold & General and JPM Natural Resources, which have returned 509.6% and 365% respectively over the same time frame.


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