Himsworth: Investing in banks now is huge gamble

Eden Financial’s Leigh Himsworth has ruled out the prospect of buying into any of the UK’s five banks after launching his £10m UK Select Opportunities fund.

Himsworth said even the brightest analysts in the city fail to understand banks' accounts, adding fund managers who were holding banks only did so because of pressure not to deviate too far away from the index.

"If you are investing in Lloyds at 30p and expect it to double to 60p then you are basically putting all of your money on red," said Himsworth.

"Fund managers cannot understand their accounts and by not knowing what their accounts are like you are risking your clients' money."

The former Gartmore fund manager has instead opted to buy into asset managers, making financials an overweight in his new fund at launch. He said they come with less risk than banks and are set to re-rate in the event of the market rebounding.

"I am investing in asset managers, the likes of F&C Investments and Hargreaves Lansdown, as if the market rebounds they will go up 5-6%, while also being a less risky investment than the banks."

Himsworth said he will be looking further down the market cap spectrum to uncover gems which have fallen out of the limelight.

The portfolio has 40 stocks with Himsworth adopting a high conviction approach.

He is currently favouring tier two oil companies and small-cap IT stocks which he believes are both undervalued.

"There is a lot of great small-cap IT companies out there in the market, the likes of Cofax and SDL, which have positive cash flows and the capability to expand through launching innovative products," said Himsworth.

"I believe the best value out there in the market is in the ‘slightly off radar' stocks as they have the greatest growth prospects."

"I am not going to hug the index, too many managers in the sector are already doing that. I am going to put the leg work in to uncover gems."

At launch the fund has 26% in the FTSE 100, 35% in the FTSE 250 and 31% in small-caps, with a 3-5% cash position. Himsworth added he aims to be fully invested within two weeks.

The fund's initial charge is 5%, with the AMC at 1.5% and minimum investment for retail investors standing at £1,000.