Long-established UK equity value manager Julie Dean believes the longer-term trend in the UK is for disinflation, and so she has been concentrating the investments in her new Chelverton UK Opportunities fund on stocks which benefit from improved consumer sentiment.
Dean’s fund will have a minimum of 60 per cent of its capital in large caps, and here banks and housebuilders are a focus, while down the market cap scale, she said she has “made a lot of money” from an investment in Greggs, the UK bakery chain.
Her view is that the policy response to the global financial crisis was to vastly expand the money supply, a process known as quantitative easing, which created inflationary pressures.
This was exacerbated by the further expansion of the money supply, and further inflationary pressures.
But, more recently, central banks have begun to withdraw the monetary stimulus, a process known as quantitative tightening.
Dean’s view is this will lead to a reduction in the money supply, and a consequent period of marked disinflation, which will boost consumer spending power, and so boost those segments of the UK market.
The structure of her fund means she must have a minimum of 60 per cent in large caps, at present the allocation is 63 per cent, and includes UK banks stocks, which she feels will benefit from disinflationary pressures and so be able to lend more.
