Have financials banked in the bad news?

It feels like investors are throwing in the towel on Australian bank shares. With the S&P/ASX 200 Financials Index deep in a bear market after years of underperformance, the horror stories that emerged during the Royal Commission, and more recently the Covid-19 crisis, Simon Mawhinney of Allan Gray says it’s natural for investors to perceive that the downhill momentum in bank stocks will continue into perpetuity.

“But like all things price needs to be taken into consideration and some of the banks trade at very low multiples… there are risks ahead but there are also rewards if the future turns out not to be as woeful as people expect.”

Here, Simon discusses how he’s positioned in the financial sector, the banks he owns and the one bank he doesn’t as at 11 March 2020.

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Past performance is not a reliable indicator of future results. The value of investments in the Allan Gray Australia Funds may fluctuate and when making an investment in the Funds, an investor’s capital is at risk. It is therefore important that you understand the risks involved before investing. This publication represents Allan Gray's view at the point of filming on 11 March 2020 which may have subsequently changed as facts or circumstances change. This publication is not personal financial product, tax, legal, or investment advice, and does not take into account the specific investment objectives, financial situation or individual needs of any particular person. This publication does not prohibit the Allan Gray Australia Funds from dealing in the securities mentioned before or after publication.