Paul Niven, fund manager at F&C Investment Trust, shares his expert insights on investment opportunities, including stock picks, sector preferences, and geographic insights. He discusses market outlook, specific stocks like Tesla and Gold, sector risks, personal preferences, and policy and economic views, providing a comprehensive view on current and long-term investment strategies.
Investment Insights with Paul Niven of F&C Investment Trust
In the latest installment of “Where Experts Invest,” Paul Niven, fund manager at F&C Investment Trust, shares his insights on investment opportunities and pitfalls. F&C Investment Trust, managing assets valued at approximately £6 billion, invests globally in publicly listed firms, unlisted securities, and private equity.
Investment Picks:
- Next 10 Years: Niven recommends Intuitive Surgical, a US-based leader in surgical robotics, noting its dominance and growth potential in the medical field.
- Next 12 Months: Smurfit Kappa, a manufacturer of paper-based products, is advised due to its strong market position and potential for earnings upgrades as it emerges from the cycle’s trough.
Sector Preferences:
- High Potential: Semiconductors, vital in the AI technology sector.
- Avoid: Auto sector, due to intense competition and uncertainty with the rise of electric vehicles.
Geographic Insights:
- Best Value: The UK market, deemed attractive in valuation compared to historical performance and other markets, offers a low sector-adjusted price-to-earnings ratio despite potential long-term growth being more appealing elsewhere.
Market Outlook:
- US Market: Despite high valuation, the US market is noted for delivering premium growth, justifying its valuation level.
- Growth vs. Value Stocks: Niven maintains a balanced portfolio approach, acknowledging the current rich valuation of growth stocks and discount opportunities in value stocks.
Specific Stocks:
- Tesla: Valued high with future growth expected, but faces stiff competition.
- Gold: Suggested as a portfolio diversifier but not essential for all investors.
- Bitcoin: Regarded as a speculative investment with high volatility.
Sector Risks:
- Geopolitical Threats: Tensions in the Middle East and between the US and China.
- Inflation and Interest Rates: Niven predicts inflation rates to be transitory, with slower economic growth leading to falling interest rates but not returning to past decade’s lows.
Personal Preferences:
- UK Banking Shares: Considered undervalued with high profitability and capital levels.
- Tech Investment in UK: Sage, despite recent results, shows strong growth potential in transitioning to cloud-based services for SMEs.
Policy and Economic Views:
- Brexit’s Impact: Cited as a factor for weaker UK equity performance but offset for investors due to sterling’s depreciation.
- Future Outlook: Anticipation of lower interest rates and transitory nature of inflation.
With these insights, Paul Niven provides a comprehensive view on his current and long-term investment strategies.