Banks remain an underweight area for Airlie Australian Share fund as manager Matt Williams is cautious about their ‘confusing outlook’.
Commonwealth Bank was the only big four bank held by the Australian equity fund, which was highly concentrated with between 15 to 30 stocks.
In a webcast, Williams said there were various factors on the horizon, particularly in the light of measures put in place around COVID-19, which made him hesitant about the outlook for the sector.
“Banks are confusing, they look cheaper now relative to any period of history on various measures but the environment has changed a lot in the last 25 years and the outlook is not great for them.
“There are some doomsday scenarios but I am positive. We could see a rally in banks in the first half of 2021 but there are other big factors such as loan deferrals and credit growth which outweigh this.
“We are only in Commonwealth Bank which has a fantastic retail bank and has an advantage over the other three majors. But we are underweight the sector.”
Commonwealth Bank was the best-performing stock of the big four banks since the start of the year to 2 September with losses of 12% compared to more than 20% for the other three players. ANZ lost 25%, NAB lost 27% and Westpac was the worst-performing bank with losses of 28%.
