Lyttleton: Tough times in store for financials

BlackRock's Mark Lyttleton has cut his banking exposure on concerns a heavier burden of regulation and increased capital requirements are clouding the outlook for the sector this year.

The manager of the £1.5bn UK Dynamic fund has trimmed 1% off a position in HSBC in the view there are better opportunities elsewhere, but the bank is still 5% of the fund because it is a major constituent of the UK market. The fund holds 15.6% in financials, versus the benchmark’s 23.3%. “We are underweight across the financial sector – the outlook for that area is tough; there are so many concerns over banks in particular, regulation and capital, while debt levels are also high,” Lyttleton says. However, he adds the outlook for the UK’s major banks is still more favourable than for ...