Dominion, the Hong Kong-based fund management group, said it has launched a new fund targeting undervalued shares in banking, insurance and asset management. 

The Dominion Global Finance Fund – authorised in
Guernsey - began purchasing assets on 13 October. It will give wealth managers exposure to price lows not seen since the 1980s and 1990s.  Dominion will focus on finance companies whose share price has fallen significantly, but whose underlying business model can be expected to perform strongly in the long term. 

Alex Bell, chief executive officer of Dominion said: “This is a project we have been working on throughout much of this year and is emphatically not an attempt to call the bottom of the market. We do feel however, that it there is very good value to be found at current levels.  There are a number of stocks whose share price has suffered simply because they are in the financial sector but whose business model is solid, leaving them well placed to allow them to both recover and in some cases benefit from the crisis.”

“Valuations are very low by historic standards even allowing for further write-downs, and it is likely that the profitability of the sector is approaching its low point which allows significant scope for share price growth”, said Arjen Los, Dominion’s chief investment officer and head of investment analytics.  

Dominion’s Global Finance Fund began as a project to invest Dominion’s own capital: most of the initial capital will be supplied by corporate reserves.  Established in 2004, the firm currently has over $2 billion assets under management.

The fund’s investments will be diversified across the international banking sector, insurance groups and other fund management or specialist financial services stock, and will concentrate on large cap opportunities in Europe, the US and Asia.

Just over half the fund’s initial holdings are in banks, with insurance companies representing 20 per cent, and diversified financial companies the remaining 27.5 per cent of the portfolio.  Dominion intends to average investment into market over a period of time to reduce volatility.