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US economy “poised for late-year recovery”

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The US economy will show the seeds of recovery towards the end of 2009, according to Pramit Ghose, manager of the Elite Bloxham Global Equity Income Fund.

The US economy will show the seeds of recovery towards the end of 2009, according to Pramit Ghose, manager of the Elite Bloxham Global Equity Income Fund.

As a result, he has been increasing exposure to the US since the summer of 2008, taking the fund’s total US holdings to 33 per cent.

Key US holdings to date are Johnson & Johnson, AT&T, Lockheed Martin, Microsoft and PepsiCo. In contrast Ghose (photo) now holds only 12 per cent of the fund in UK stocks.

While Ghose says he is likely to stay fairly cautious for the first half of 2009 – the fund has 18 per cent cash – he is looking to increase equity exposure on market weakness. He says he has taken profit recently from a number of holdings that have benefited from the recent market bounce.

Banking juggernauts BNP Paribas, HSBC and JP Morgan now account for six per cent of the fund although the fund remains underweight banks for now.

While 60 per cent of the portfolio could be considered ‘defensive’, Dublin-based Ghose says that the fund has a ‘decent weighting’ in technology (10 per cent plus) and in some ‘less cyclical’ type stocks, for example France’s Air Liquide and Japan’s Trend Micro.

‘We also like Diageo, which is a steady performer, and CRH, which is the only Irish stock we hold – it derives half its revenues from the US and is a world class company. Its P/E is lower than its sector average but its earnings prospects are much better in our view,’ he says.

Currently CRH makes up 1.9 per cent of the fund.

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