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News Release from: Gartmore | Subject: Investments and Mortgages
Edited by the Insidemoneytalk Editorial
Team on 14 April 2008
Gartmore Uncovers More Opportunities in
Mining
Gartmore continues to hold a significantly overweight exposure to the mining sector (relative to its benchmark) in its UK Growth and UK Focus Funds[1],
with Kazakhmys, Rio Tinto, Vedanta Resources and Xstrata among the UK investment team's most favoured stocks While prices across the sector have risen well over the past year, Sacha Sadan, manager of Gartmore's £271m[2] UK Growth Fund, believes that the market remains overly pessimistic about the outlook for industrial metals
This article was originally published on Insidemoneytalk on 2 Mar 2007 at 8.00am (UK)
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"Copper prices for forward delivery suggest no more than a modest decline between now and 2010.
This contrasts sharply with the median expectation of analysts, who appear to be discounting a much sharper fall," says Sacha.
Sacha points to continuing strong demand from the world's developing countries and scant evidence of any actual collapse in demand in the west as evidence that the cycle for metals is likely to be significantly longer than the stock market is currently prepared to believe.
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In recent weeks, Gartmore has added BHP Billiton to its UK portfolios, taking the view that the stock has been de-rated excessively following BHP's decision to table an offer for Rio Tinto.
Another recent addition has been Talvivaara Mining, a Finnish company with one of the world's largest known sulphide nickel resources.
Talvivaara is moving closer to production and is operating on-budget and on-time.
With the risks receding of teething problems associated with mines moving into production and with the demand for nickel staying strong, Gartmore considers Talvivaara to represent a significant opportunity.
Mortgage Bailout Plan is Positive for US Economy - Gartmore Sub-adviser Marsico US sub-adviser Marsico: Capital Management has welcomed Congressional plans to throw a mortgage lifeline to distressed borrowers, a move intended to help stabilise the beleaguered US housing market, says Cory Gilchrist, manager of Gartmore's US Opportunities Fund and the Gartmore SICAV US Opportunities Fund.
Two US Congressmen have co-sponsored legislation that could rescue as many as two million households from foreclosure by allowing the Federal Housing Administration (FHA) to guarantee up to $300bn in refinanced mortgages.
Noting the importance of the housing market to consumer sentiment, Cory adds "we feel that it's extremely important that the government craft a viable and meaningful plan, which will put a floor underneath the ailing housing market to allow a recovery to take hold." Under the proposal, the FHA would guarantee new mortgages, issued for instance, by banks instead of buying up old ones, comments Cory.
The old unaffordable mortgages would be replaced by new affordable ones (for up to 90% of the current value of the property), with the government assuming the risk of default.
Existing mortgages would be bought below face value, forcing investors to "take a haircut," as the industry saying goes.
Equally, the proposal would require homeowners to relinquish part of any property price-appreciation for as long as five years after the mortgages are refinanced.
The proposal would apply to loans originated between January 2005 and July 2007 - homes would have to be owner occupied, with applicants presenting verified income and employment details.
The proposed legislation has a 75-80% chance of passing into the books, according to one of the co-sponsors.
The maximum payout to the original lender/trustee is 85% of the home's reappraisal value and the difference would be recognised as a loss.
In determining the economics of the plan, lenders will compare any potential loss to foreclosure costs, observes Cory.
Visible signs of a stabilising housing market could have an important positive impact on consumer and business confidence, lending activity and economic growth.
If that scenario were to unfold, areas such as Consumer Discretionary and Financial Services could become quite attractive from an investment perspective, according to Cory.
Special Offers For the Gartmore Cautious Managed Fund and the Gartmore MultiManager range of Funds, for all lump sum investments, from advised sales only, now extended until 30 April 2008.
1% discount on the initial charge.
4% initial commission.
1.
Gartmore UK Growth Fund and Gartmore UK Focus Fund Benchmark: FTSE All Share Index.
2.
As at 31/03/08.
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