Patrick Ryan – manager of the Lazard Global Equity Income Fund – is focused on finding robust value plays. He likes firms that generate enough cash to survive should the recovery falter, but are also trading at a sufficient discount to offer a decent gain if the year-long share rally continues.
So far so good. The Lazard Global Equity Income Fund, which Ryan has managed since its launch in October 2007, returned 57.9% in the year to 15 March. That’s above the average Global Growth sector return of 50.5% for the same period, according to Morningstar.
Favouring stocks that will perform well regardless of the wider economic backdrop, he rates Banco do Brazil, the former state-owned bank of Brazil. Consumers and companies in emerging markets are cautious borrowers and under less pressure than their indebted peers in the West.
Banco do Brazil gives the fund “a strong exposure to the structural growth within the Brazilian economy,” says Ryan in Investment Week. When it comes to developed markets, Ryan has a large chunk of the fund invested in insurance companies, because “the insurers went through the downturn much better than many banks did”.
Ryan believes that there are plenty of factors that point to a global recovery, but “there are going to be bumps along the road” as governments around the world reverse measures designed to prop up their struggling economies. However, overall he believes that stocks are cheap. High-yielding equities should be “the next step up in the risk spectrum” after investors flocked to corporate bonds last year. Ryan is expecting his fund to yield 5.6% over the next 12 months.
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Lazard Global Equity Income Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Zurich Financial Services | 3.3 |
| Redecard | 2.5 |
| BP | 2.5 |
| Kumba Iron Ore | 2.5 |
| Reynolds American | 2.5 |
| Total | 2.5 |
| AT&T | 2.4 |
| Taiwan Semiconductor | 2.4 |
| Genuine Parts Co | 2.4 |
| Darden Restaurants Inc | 2.4 |