Oct 5, 2016

'Hated' banks are new commodities, says French boutique founder - Citywire

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 Citywire Deutschland,Renaud said he had 18.42% of the Mandarine Valeur 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 BNP Paribas 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 Mandarine Gestion 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.'
Renaud’s attitude towards banks is similar to Nicolas Walewski’s, who has started to buy up European banks for his Alken Fund - European Opportunities.
The Mandarine Valeur 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.

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