Latest news with #BlueWhaleGrowthFund
CNBC
a day ago
- Business
- CNBC
Why the manager of a $2 billion fund is cooling off his European defense investments
A fund manager who oversees assets worth close to $2 billion told CNBC that the European defense bull run may soon begin to cool off as valuations hit "extreme" levels. Speaking to CNBC's "Europe Early Edition" on Monday, London-based Stephen Yiu, who manages the £1.4 billion ($1.9 billion) Blue Whale Growth Fund , said he had wound down his exposure to the European defense space. Regional defense stocks have seen an extraordinary rise in recent months, fueled by promises from the European Union , regional governments and the NATO military alliance to drastically hike defense spending. The Stoxx Europe Aerospace and Defense index has gained more than 55% since the beginning of the year. Describing the sector as "extremely interesting," Yiu explained that, around 18 months ago, his fund began a position in European defense that included allocating capital to Italian defense champion Leonardo . However, he also suggested that the spectacular rate of growth among European defense stocks may have peaked. "I think the issue with European defense — even though we continue to like the companies or the sector — is the valuation has been quite extreme," Yiu told CNBC. Military aircraft manufacturer Leonardo, which the Blue Whale Growth Fund holds, has gained more than 86% so far this year — and it still isn't one of the sector's biggest movers. French maritime systems maker Exail Technologies is up almost 500% year-to-date, while German defense giants Renk , Hensoldt and Rheinmetall have all tripled in value. LDO-IT R3NK-FF,HAG-DE,RHM-DE,EXA-FR YTD line European defense stocks While Yiu's fund still holds Leonardo stock, it has reduced the size of its holding in recent months. He advised investors to consider valuation in terms of outperformance potential, taking into account how long it could take for Europe's blockbuster fiscal packages to trickle through to corporate earnings. Yiu argued that seeing the direct impact is likely to take "a few years." "Compared to the beginning of the year [with] Leonardo, you would have seen it in our top 10 holdings, which would be a big conviction, part of our mandate," he said. "And over the last few months, you haven't seen it [because] we have actually taken profits." He also cautioned that the entry point into European defense stocks "is probably not today." "The question is, would you still be happy to hold on to it just because it could still contribute to some outperformance?" he added. "I think the answer is yes, but I think the easy money has already been made from European defense at this moment in time."
Telegraph
13-03-2025
- Business
- Telegraph
How to protect your investments as the Trump sell-off takes off
The US stock market is not happy. An estimated $4 trillion (£3.1 trillion) has been wiped off the value of companies thanks, for the most part, to President Trump's imposition of tariffs. However, Stephen Yiu, chief investment officer and founder of Blue Whale Growth Fund, thinks the market is wrong. He says: 'People were panicking that America was heading into a severe recession, that is why everyone is selling and de-risking. 'We think that is wrong and the understanding is incorrect.' Mr Yiu instead argues that Trump will want to end his final term with the US economy as a success story. Furthermore, he says the US economy is still very strong and while Trump has made a lot of announcements, his main action has been the truce in Ukraine. He says: 'This is the most positive thing we have seen in the past few years, so don't forget about that and Trump initiated that.' Blue Whale's view is to look at whether any of Trump's policies are impacting the earning power of its investments – it invests in 15 US companies within a portfolio of 25 – and if the answer is no, it's not time to sell. He adds, 'If the price is down, none of the company's fundamentals are changing, and nothing is happening to impact the earnings power, then it is an attractive time to buy more of the shares if you are invested. 'If you are not invested then now is a good time to start and none of Trump's policies will have a negative impact on the earnings power.' However, the sharp market sell-off since the start of the week suggests not all investors are as bullish as Yiu. Trump is doubling down on his threats of trade wars and refusing to rule out taking the country into a recession as a result of the measures. So what can you do? Telegraph Money takes a look at what you can do to protect your money and what you should be thinking about as you review your Isa investments ahead of April. Is now a good time to buy? 'Buy the dip' is a frequently touted investment mantra, which suggests that a share price fall is just an opportunity to buy companies you believe in at a discounted price. However, to buy the bottom of the market, when share prices are at their lowest and the only way is up, is harder to put into practice. Susannah Streeter, of Hargreaves Lansdown, explains: 'Trying to buy a falling asset is a bit like trying to catch a falling knife and the risk is it ends in tears.' One strategy she suggests is to 'drip feed' money into the market rather than investing a large lump sum in one go. Known as pound-cost averaging, it hedges your risk as, if the price falls further, you haven't committed all your capital at a higher price – and can even buy at a lower price. James Norton, of Vanguard, agrees: 'It's hard to tune out the noise, but timing markets is notoriously difficult and second-guessing what sectors to buy or sell seldom works.' It is also worth taking a step back, suggests Ms Streeter, and looking at the fundamentals of the companies themselves in a similar way to Mr Yiu. Helen Jewell, of BlackRock, agrees, adding that buying during a sell-off can be an opportunity 'as long as you have a balanced portfolio, believe in the fundamentals [of the companies] and your risk tolerance is there'. Diversification Even if you are not planning on diving into the current market volatility, events like this are good opportunities to review your portfolio and ensure there is good balance and diversification across both sectors and geographies. Andrew Oxlade, of Fidelity International, says: 'It is a very mixed market. There was a lot of focus on the US but it was ripe for a fall as it was so highly valued. There are cheaper markets elsewhere.' Since the start of the year the FTSE 100 in London has risen by 3.3pc, while the Eurozone Eurostoxx 50 is up by 8.9pc. It is also worth looking at the companies within your funds, as many will invest in the Magnificent Seven stocks – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla – meaning you may be more invested in them than you realise. Ms Jewell says: 'It has reminded people to be well balanced in portfolios in every angle, geographically between the US and Europe, but also in the US itself. 'There is a lot of talk of the Magnificent Seven but you are seeing a convergence in earnings between the Magnificent Seven and the other 493 [stocks on the S&P 500].' Safe haven However, even if you are focused on the long term, Streeter warns that you need something 'working for you' if the markets continue to fall. This means looking at so-called safe haven assets, which have traditionally performed well in times of volatility. Laith Khalaf, of AJ Bell, says: 'These assets are used by investors seeking a more cautious approach to investing and are usually paired with an equity portfolio to provide some ballast.' Of the assets AJ Bell looked at, including gilts and cash Isas, gold has performed best over the past 10 years, turning £10,000 into £26,119 over the period. Research from the investment platform shows that the global index tracker has returned 225.1pc, compared with the average cash Isa, which has delivered 14.2pc, or the typical gilt fund which has produced a loss of 5pc.
