The global attitude to nuclear power has changed, a fund manager has said, as he has increased exposure to companies involved with liquefied natural gas.
In his latest fund update report, Nigel Thomas who manages the AXA Framlington UK Select Opportunities Fund said the fund had increased holdings in RDS Shell and BG, global players in the liquefied natural gas (LNG) market.
LNG is used as an energy source and has been discussed as a favoured alternative to nuclear power, following the Japanese earthquake and tsunami which caused serious problems at the country’s Fukushima nuclear plant.
It is a cleaner source of energy compared to other fossil fuels, such as coal, but still produces carbon dioxide.
Thomas said many companies in developed markets were enjoying good profit margins, which was boosting cash flow and balance sheets. This was also leading to rumoured and actual merger and acquisition activity.
The phasing out of quantitative easing could lead to falls in some asset prices. As quantitative easing (QE) was designed to boost the funds available in riskier markets such as equities, Thomas questioned whether the end of QE could lead to a pull back in some commodity prices.
“With the expectation that the punch bowl is about to be withdrawn, perhaps the wind will be taken out of some commodity bubbles? In the Fund, we are underweight mining stock and it is interesting to observe some rotation back into stocks whose rising input prices have been an issue, i.e. Unilever, Diageo and, for retailers, (cotton prices) i.e. Marks and Spencer, Dunelm and Next, all of which we own,” Thomas said.
The fund has increased its weighting in the media sector, based on changes in ‘how information and data is delivered, received and analysed’ which is leading to a ‘change in the balance of power between some traditional and new media.’
Technological advances mean people are paying to access content on smartphones, iPads and other digital devices, creating opportunities for publishers in digital content. This may also benefit traditional media companies with growing digital arms.
The fund has invested in ITV partly because it sees opportunities for companies re-selling existing content for digital use and also the potential for a recovery in advertising and lower cost programme production which will lead to higher earnings.
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