Banking on a safer investment

Banks and financial services companies are proving to be perfect fodder for special situations managers who must stick to their convictions even when sentiment is driving markets down

Banks and financial services companies are the perfect fodder for special situations managers – but only if, in general under present circumstances, they avoid them. That is because, with one or two exceptions to which I will turn, special situations managers must understand properly every stock they invest in. Otherwise one is taking the sort of risk that can torpedo a portfolio. Banks and financial services are a significant part of the UK market, certainly. Banks are almost 14% and financial services are over 6% of the FTSE All-Share Index. As sectors, both have done phenomenally well...