Experienced investor Marc Renaud has become the latest manager to pile into European banks despite the current crisis in the sector.
Speaking to Citywire Selector’s sister website CitywireDeutschland,Renaud said he had 18.42% of the MandarineValeur fund in banks. This is overweight compared to the benchmark allocation of 11%.
'There is no fundamental reason why quality banks with a strong balance sheet are so favourably valued. But everyone hates banks. They are like the new commodities,' Renaud said.
In terms of holdings, French bank BNPParibas is currently the second largest holding in the fund at 4.42%. He has smaller allocations to other banks including Spanish group Santander and Vienna-based Erste Bank.
'These banks will be the winners of the present banking crisis, because their business models are stable and they have not gone into investment banking too much,' he said.
The founder of MandarineGestion said he may have overweighted banks too early, but believes the turnaround of European banking names is imminent.
'Janet Yellen is a catalyst, as if the US raises rates in December as expected, it would be good for the banking sector,' Renaud said.
Around 45% of European fund managers are underweight in banks. 'As happened with commodities, if the turnaround comes these fund managers will go back to the banking sector.'
The MandarineValeur R fund returned 6.4% in euro terms over the three years to the end of August 2016. This compares with a 27.6% rise by its Citywire-assigned benchmark the STOXX Europe 600 TREUR over the same period.