Standard Life bets on sustained UK recovery
LONDON (Reuters) - Standard Life Investments' head of UK equities is betting on a sustained recovery in UK equities over the next year and thinks there are good investment opportunities in oversold stocks.
"We see opportunities to make money as there are plenty of distressed companies out there," David Cumming, who is also lead manager of the UK Equity Recovery Fund, told reporters.
"Equity valuations are depressed and the FTSE is still at levels seen 12 years ago."
The stocks his fund invests in are those that have fallen in price because of poor business performance or a deterioration in the market's perception of its prospects and where Standard Life Investments had identified a catalyst for a positive change, either at an economic or company-specific level.
The fund's top overweights include GKN (GKN.L), DSG (DSGI.L), Segro (SGRO.L) and Yell Group (YELL.L).
Cumming picked mining, industrial and travel and leisure as sectors with strong potential.
Commodities are expected to received a boost on demand from a resurgent China and India, boosting mining stocks.
"Markets have continually underestimated the growth in China and India is also robust," he said.
In travel and leisure, Cumming said he liked British Airways (BAY.L), Easyjet (EZJ.L) and Stage Coach (SGC.L).
"The news flow in this sector is getting better and the valuations are also low."
The fund, which was launched in March 2009, has returned 110 percent compared to returns of 47.6 percent by the FTSE All Share Index. Assets under management stand at around 29 million pounds.
Cumming said he had also started adding to holdings in GSK (GSK.L), HSBC (HSBA.L) and Vodafone (VOD.L) - "big names that look attractive".
He expected current growth trends to continue.
"I see no reason why there shouldn't be a V-shaped recovery. Momentum is certainly improving - housing transactions are rising, car sales are picking up, there's strong growth in Asia. So I don't see why recovery should stall," he said.
(Editing by Elaine Hardcastle)
