Now is the time to look for pockets of opportunity

Uday Cheruvu, Australian Equities Portfolio Manager at PM CAPITAL cautions investors against taking an ‘index’ approach. "We don't think it's a broad-based index opportunity. You don't want to be in the mining side yet; you don't want to be in industrials because it's continuing to deteriorate. Now's the time to look for pockets of opportunity.” Cheruvu says they’ve put some of the cash in the PM CAPITAL Australian Companies Fund to work, buying NAB and Westpac within the last month. ”Whenever the regulator says anything about capital rules, it doesn't matter what it is, people tend to sell. People lose perspective on the fundamental earnings growth of the business, which is what happened with the Australian banks." Some commentators have expressed concern about the sustainability of banks dividends, but he disagrees. "You don't want to be touching the banks if their dividend yield is under risk… but once banks added to their coverage ratios we were broadly happy to buy them again.” Full article in the AFR (subscription required) (VIEW LINK)