Boutique fund manager Perennial Investment Partners is finding good value in United States financial stocks, many of which have more than halved in value this year.
Perennial Partners Trust has snapped up shares of Wachovia Corporation, the fourth-largest US lender, and Merrill Lynch, the third-biggest securities firm.
Wachovia has absorbed US$22 billion in losses since the mortgage market imploded last year and Merrill Lynch has shouldered US$19 billion in losses, with shares falling from US$55.70 on January 1, to US$25.98 on August 14 trading.
But although those purchases were daring bets, they only made up two of "up to 60 ideas" in the $8 million fund, Perennial head of retail funds management Brian Thomas said.
In the Australian market, he said Perennial thinks the All Ordinaries August 5 low of 4831 points posed tremendous value for investors.
Perennial's Balance Fund bought S&P/ASX 200 exchange traded funds and is finding good value in Australian banks and some industrial companies, he said.
He added that while commodity prices may have had a dip in recent weeks, the weakening Australian dollar will be a buffer for mining company profits.
"The big issue is how you call China and if you believe there will a big drop off in its economy post-Olympics," Thomas said.
"Whilst you may have some moderation in demand, we think the long-term drivers are still there." He said.
