Elite Bloxham Global Equity Fund tips US stocks as best buy for 2009

Pramit Ghose, manager of the Elite Bloxham Global Equity Income Fund, has been increasing exposure to the US since the summer of 2008, taking the fund’s total US holdings to 33 per cent and broadly reflecting a view that the world’s biggest economy will show the seeds of recovery towards the end of 2009. Key US holdings to date are Johnson & Johnson, AT&T, Lockheed Martin, Microsoft and PepsiCo. In contrast Ghose now holds only 12% of the fund in UK stocks.

While Ghose said he is “likely to stay fairly cautious for the first half of 2009” – (the fund has 18% cash) – he is looking to increase equity exposure on market weakness. He has taken profit recently from a number of holdings that have benefited from the recent market bounce.

Banking juggernauts BNP Paribas, HSBC and JP Morgan now account for 6 per cent of the fund although the fund remains underweight banks - for now.

And while 60% of the portfolio could be considered “defensive”, Dublin-based Ghose said that the fund has a “decent weighting” in Technology (10%+) and in some “less cyclical cyclical” type stocks, for example France’s Air Liquide and Japan’s Trend Micro.
“We also like Diageo, which is a steady performer, and CRH, which is the only Irish stock we hold – it derives half its revenues from the US and is a world class company. Its P/E is lower than its sector average but its earnings prospects are much better in our view,” he said. Currently CRH makes up 1.9% of the fund.

At a time when investors are facing the prospect of savings rates falling to as low as 2% during 2009, the Elite Bloxham Global Equity Income Fund is now yielding 5.2%, with a dividend growth target of 4% in 2009. Ghose believes this is an ideal time for clients to increase their exposure to his fund and is confident he can maintain positive dividend growth for years to come.

The fund is comfortably out-performing the IMA Global Growth sector average since launch and over 3 and 6 months.

It has also turned in a far superior performance to the IMA UK Equity Income sector average, outperforming it by nearly 8% since launch.

Food, tobacco, utilities and technology currently dominate the fund and top ten holdings for the fund include AT&T, AXA, Bayer, Johnson & Johnson, Lockheed Martin, Roche and Total.

Bloxham manages about £600m in Global Equity Income portfolios and is based in Dublin.