"Expectations are so low in the stock market for the domestic and consumer related sectors that actually that is an area where I think there are tremendous opportunities to make money," he says.
But, while valuations may well be attractive at the moment, it would be wise to also look at how those funds with exposure to retail, consumer and domestic sectors performed over the past year.
There are 35 IMA UT and OEIC funds with exposure to retail in their portfolios according to data from Financial Express up to 28 April. Exposure ranges from 0.43 per cent to 11.17 per cent, while the total return of the funds ranges from 16.53 per cent to 100.34 per cent.
The best performer was the Close Special Situations fund, which has a 10.40 per cent weighting to the retail sector. Over a one year period it outperformed the FTSE 350 General Retailers Index and the IMA UK Smaller Companies sector which returned 26.51 per cent and 44.48 per cent respectively.
Performance of fund vs indices over 1-yr
Source: Financial Express Analytics
The fund has a six per cent holding in music retailer HMV, which reported a drop of 8.2 per cent in total sales in the 16 weeks to 28 April 2010. The announcement saw share prices drop 6.15p on the afternoon of 29 April 2010 to 72.97p, a change of 7.77 per cent. This means the share price is down 47 per cent from the same time last year.
Further analysis shows there are 1,024 funds with an exposure to the consumer product sector, of which 17 have an exposure of 30 per cent or more. Exposure in the 17 funds ranged from 30.10 per cent to 74.90 per cent, while performance ranged from 25.28 per cent to 109.83 per cent.
The best performing fund was the JPM Emerging Market Small Cap fund, which has a 33.80 per cent weighting to the consumer products sector. The fund has a 1.70 per cent holding in Wumart Stores, one of China's leading retail chains.
The fund with the largest exposure to consumer products is the Investec Global Franchise fund, which includes seven consumer product companies in its top ten holdings. These consist of Nestle, a 7.60 per cent holding, Procter & Gamble (4.9 per cent), Diageo (4.5 per cent), Pernod Ricard (4.5 per cent), Heineken (3.3 per cent), Coca-Cola (3.2 per cent) and PepsiCo (3.2 per cent).
Performance of fund vs indices
Source: Financial Express Analytics
Wine and spirits company, Pernod Ricard, posted positive results on 29 April 2010 for the third quarter of 2009/10, with consolidated sales up 14 per cent to €1,538m. In the last 12 months the fund has returned 36.31 per cent and outperformed the IMA Global Growth sector, which returned 35.72 per cent in the same period. However, the fund failed to outperform its benchmark - the MSCI World Index, which returned 40.88 per cent.
In his monthly update, Sam Houlie, manager of the fund says: "Consumer discretionary was also in demand, particularly in the US retail space, which has benefited from increased consumer spending. We continue to have a very high exposure to consumer staples, particularly tobacco, healthcare and selected food producers."
However some intermediaries remain wary of consumer products, particularly in the UK, preferring to wait to see what happens after the general election next month.
Graham Toone, head of investment research at AFH is one of these: "The key question is whether or not, once the election is out of the way and cuts start to happen and interest rates start going up, how will the consumer react? That’s my concern," he says.
"From our perspective we are a bit wary about overly exposing ourselves to the consumer sector at this time."