Platinum backs travel sector for long-term growth
The Platinum International fund has begun “carefully” increasing its exposure to the beaten-up travel sector by buying up booking agents and aerospace stocks.
In a market update, the firm said it believed growth in the travel sector would return once the restrictions were lifted.
It was avoiding airlines but was focusing on stocks such as travel agents and aerospace. Airlines have been significantly beaten-up as restrictions related to COVID-19 saw borders closed and thousands of flights cancelled. Qantas saw a 48% drop in share price since the start of 2020 while Virgin Australia entered into administration in April.
Portfolio manager Clay Smolinski said: “An area we have been starting to carefully build exposure to is travel- a long-term growth industry that will come back in time. In major sell-offs we always hope to add a group of out-of-favour stocks that increase portfolio diversification and quality.
“We are not trying to time our entry into beaten-up airlines, for example, but are looking at the building blocks such as travel booking engines and aerospace.”
The fund currently had a net market exposure of 70% and said it had been hard to find strong businesses with appealing long-term growth trends in this type of market environment.
“On the valuation side, we want to own strong businesses with long-term growth trends that have been hit in the short term. These are, however, less plentiful than we would hope, with the market currently keen to completely look through any mid-term challenges many businesses will face,” he said.
“Removing our index shorts (approaching 10% of the fund) provides a readily-available lever to increase exposure quickly, should we see fit.”
The Platinum International lost 6% over one year to 30 April, according to FE Analytics, versus returns of 1% by the global sector within the Australian Core Strategies universe.
Performance of Platinum International fund versus global sector over one year to 30 April 2020
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Laura Dew
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