Investment trust insider on 2022 – James Carthew: Anomalies and opportunities on next year’s horizon
Many of the themes that we had going into 2021 look likely to persist into 2022. Covid has not gone away, despite the success of vaccinations. God forbid we end up with lockdowns again, but this is quite possible. This pushes the growth versus value debate back in favour of growth again. The corollary of this is that we may see a second value bounce once omicron is either under control or no longer seen as a threat.
Value paused
Within the investment companies sector, Temple Bar (TMPL) is one of only a handful of funds still focusing on value. It had a phenomenal run after the vaccine discovery last November, but its net asset value (NAV) has been flat over the last six months as new Covid variants have weighed on sentiment.
Its fund managers, RWC’s Ian Lance and Nick Purves, are upbeat about the prospects for the stocks in the portfolio. They emphasise that the trust is invested in undervalued stocks, not poor quality or declining companies, and question the valuations being attributed to many growth companies.
One other point of differentiation is Temple Bar’s exposure to the energy sector and stocks such as Shell (RDSb), BP (BP) and TotalEnergies (TTE:EN). The trend towards shunning fossil fuel companies is weighing on their share prices, though high oil and gas prices are supporting very strong cash generation and all three are investing in the transition towards a net-zero world. They also have… read more here