Insurance companies are too cheap to ignore right now due to the negative sentiment towards the financials sector.
He said Basel-based Baloise hasn’t cut dividends for years and it has a proven business model.
‘I also like SwissLife, as the company has some attractive strategic ideas, for instance to increase its wealth management business. This along with their real estate management will help it to diversify from the classical insurance business.’
Industrials holds the biggest weighting in the strategy. The fund manager said one of his successful plays in this sector is Belimo, which has a leading position in production of equipment for heating and air-conditioning.
‘You have some special motorized systems in commercial buildings, which allow heat or water to flow in the pipes. In order to do that you need engines to open and close globe valves and Belimo is producing those’
He said the market is too small for such big companies like Schneider Electric, but perfect for Belimo, which is several steps ahead of its biggest competitors in terms of innovations.
‘The company has a very loyal customer base and a good stakeholder and employee management. For the large company the market is too small but for Belimo it is a great business’
Jäger also thinks that mega-trends such as urbanization will boost production of elevators, as buildings are becoming higher.
‘Approximately 78% of growth in the elevator business is coming from China, as almost four out of ten installed elevators are located in the country. This number is decreasing slightly at the moment but I think it is only temporary and we will soon see some growth coming from China again.’
Biotech vs telecoms
When it comes to the biotech sector, the fund manager reduced his position to Baselia Pharmaceutica and added more on the telecoms sector, increasing his position in Swisscom from 1.9% in March to 4.7% and introducing a company Sunrise to the fund with exposure of 1%.
‘With telecoms I saw the opportunity, where the fair value was higher than the market price. The sector is not very cyclical and has high dividend yield and should be more stable than others in the current shaky market environment.’
Meanwhile in the smaller mid-cap space the fund manager has exposure to a consumer discretionary company Metall Zug, where he sees the biggest gap between the current valuation and the fair value at the moment.
‘Metall Zug has a very good balance sheet, no debt and attractive dividend yield. It is the number one name in Switzerland for production of kitchen appliances, such as ovens for example’.