Lazard’s Custis eyes miners as valuations turn attractive

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Lazard Asset Management’s Alan Custis believes now is the right time to invest in miners and has been adding exposure in this area.

Custis, who co-manages a number of funds including the £132m Lazard UK Alpha fund, sees the valuations in the sector as attractive.

FE Analytics shows the FTSE All Share Mining Index is down 17.7 per cent over three years to 5 June, compared with the 50 per cent gain in the wider  FTSE All Share.

“It is now starting to look interesting and we have been adding capital in this space. Valuations are starting to look extremely compelling,” the manager says.

Custis is undeterred by the impact that a slowing Chinese economy has on the mining sector and says: “Our view is that China doesn’t get as bad as extreme pundits suggest – it comes down to valuations. There is now a view to make returns for shareholders.”

Referring to the new management boards that have recently taken control of the largest mining companies with an eye for cost-cutting, Custis does concede that this “will take a long time to turn around”.

Custis’ Lazard UK Alpha fund owns miners such as Rio Tinto and Glencore in its portfolio.

Lazard UK Alpha’s cumulative performance to 5 June 2013

 
Fund 5.56% 9.77% 19.34% 44.15% 39.78%
5.66% 11.80% 23.24% 52.41% 48.47%
-0.09% -1.81% -3.16% -5.42% -5.86%
  133 / 284 189 / 282 177 / 282 213 / 268 169 / 246
2 3 3 4 3

Source: FE Analytics