Ryan Paterson, research manager at Thesis Asset Management, has advised investors to avoid asset managers when increasing exposure to UK financials, as they are currently "too highly geared to volatile markets".
Paterson, whose strategy is applied to the Thesis UK equity portfolio range managed by Steven Richards, said asset managers could also see their costs increase in the next two years, following the introduction of the Markets in Financial Instruments Directive II (MiFID II). "We have held asset managers previously, but they currently look volatile due to their exposure to ever-fluctuating markets, and as a result we believe their upside has generally become fairly limited, with high-beta trades potentially already having been and gone," he said. "On top of this, the provisional introd...
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