NEW YORK, NY (TheStreet) -- Citigroup (C), the best performer among global U.S. banks, will benefit more than Bank of America (BAC), JPMorgan Chase (JPM) and other rivals as loan losses decline and emerging economies buy more banking services, said Oliver Pursche, a manager for the GMG Defensive Beta Fund (MPDAX).
The mutual fund, started last August, has returned 2.6% this year. Citigroup's shares have risen 47% in the same period, Bank of America has gained 22% and JPMorgan has advanced 7.9%.
Citigroup posted a profit of $4.4 billion in the first quarter, the most since the second quarter of 2007. Fixed-income revenue increased, and Citigroup raised the value of subprime-mortgage backed bonds it holds, while writedowns on those types of securities in the past two years have caused net losses.
Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.Are you bullish or bearish? Pursche: We are bullish on equities, select commodities and inflation-protected securities, and bearish on fixed income. The principal reason we are bullish on these areas is that we believe that infrastructure expansion, along with global demand and wealth shifts, are providing substantial growth and, as a result, investment opportunities. Using a theme-based approach to investing leads to superior long-term investment results, all the while being able to avoid some of the more volatile areas of the stock market. Our outlook tends to be optimistic by nature, while being defensive by strategy. What is your top stock pick? Pursche: In terms of what stock we believe could be the best absolute performer, Citigroup is it. The global financial sector is at the genesis of its turnaround. Within the financial sector, we look for global brands that have a strong management structure, improving fundamentals, in particular lower loan-loss reserves, and are in a position to capitalize on the growing wealth in emerging markets. Citigroup is ideally positioned for this. What is your best "sleeper" stock choice? Pursche: Dollar Tree (DLTR). Although we believe the U.S. economy is recovering and will prove to be stronger than most expect, we also continue to see high unemployment. Dollar Tree offers an attractive product mix that is of value and interest to millions of struggling Americans.
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