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Product category: Investment funds
News Release from: Gartmore | Subject: Investment
Edited by the Insidemoneytalk Editorial Team on 03 September 2007

Gartmore's Rogan on US Stock Opportunity

As the fallout from US sub-prime problems continues to unnerve international investors, it may seem counterintuitive to add a US financial stock to a portfolio.

However, Neil Rogan, manager of the Gartmore Global Focus Fund and the Gartmore SICAV Global Focus Fund, believes there are good reasons to add Bank of America to the Fund's concentrated list of shares Not least that, being light in exposure to US stocks and, in particular, financials, the inclusion of Bank of America might reduce the Fund's overall risk profile

"Bank of America, with $1.5 trillion in assets, is the second-largest bank in the US, covering some 30 states from coast to coast".

"In a move that may come to be seen as the cavalry coming to the rescue, Bank of America has used its financial strength to make a $2 billion investment in Countrywide Financial, the largest mortgage lender in the US", says Neil.

Neil continued, "rather than a bailout for Countrywide, the deal constitutes bargain shopping for Bank of America, as Countrywide's shares had almost halved in value amid concerns about a credit crunch in the mortgage industry".

"In particular, the preferred securities snapped up by Bank of America yield 7.25% and can be converted into common stock".

"As a sign of confidence in the future, Bank of America has also recently announced a 14% increase in its own regular quarterly dividend".

"Consequently, the stock yields nearly 5%, with consensus earnings giving a P/E multiple of 10.2x for the current year." Arcelor Mittal - Steel Strong Roger Guy and Guillaume Rambourg, co Managers of Gartmore's £2bn Gartmore European Selected Opportunities Fund include steel-maker Arcelor Mittal in their top ten holdings.

Investors are currently preoccupied with the current market turmoil, concerned that the widening credit crunch may impact economic growth and hurt corporate earnings".

""The steel industry has not been immune to the market rout, and it is likely that the market will take some time before it eventually rebounds with some conviction".

"However, with strong results and analysts and steel producers alike anticipating a continued upward trend in steel prices, the mid to long term prospects for steel companies look attractive in this increasingly volatile and difficult environment", according to Roger Guy and Guillaume Rambourg.

Strong global demand continues to make steel an attractive investment, with the steel industry riding on the crest of Chinese demand, projected at 8% by 2010 - double that of projected growth elsewhere.

Shares in Arcelor Mittal have recently risen after analysts raised their recommendation on global steel stocks saying fundamentals underpin the industry.

Special Offers For the Gartmore Cautious Managed Fund, the Gartmore Global Focus Fund and the Gartmore MultiManager range of Funds, for all lump sum investments until 30th September 2007.

1% discount on the initial charge 4% initial commission No Initial Charge on Investment Trust Schemes New investments into the company's investment trust ISAit, PEPit and SAVEit schemes; No initial charge for new investments ?1,000 lump sum and minimum transfer value ?50 minimum amount for monthly savings.

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