This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bet on Insurers in Second Half, Investor Says

Stocks in this article: RNR MET NYX VR PRE TFSIX

NEW YORK ( TheStreet) -- Just because big-bank stocks have been struggling doesn't mean investors should avoid the financial sector, says Andrew Sleeman, manager of the Mutual Financial Services Fund (TFSIX), who is bullish on insurance stocks.

The $405 million mutual fund, which garners four of five stars from Morningstar (MORN), has returned 15% over the past year, putting it in Morningstar's 15th percentile for financial funds. During the past 10 years, the Mutual Financial Services Fund has risen an annual average of 3.6%, placing it in the 26th percentile.

Welcome to TheStreet'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.

Financials have lagged the broader stock market this year. What are your expectations for the sector in the second half?

Sleeman: When you have a challenging economic situation as we do here in the United States as well as in Europe, then financial stocks will generally be under pressure. That said, there are still financial stocks worth buying in areas like the property-and-casualty insurance space. We think interest rates are going to rise, which will benefit the life insurers in the back half of the year.

What is so attractive to you about reinsurers such as RenaissanceRe (RNR - Get Report), PartnerRe (PRE - Get Report) and Validus (VR - Get Report)?

Sleeman: As we move into a riskier world, we see that these guys understand risk very well and are able to price for that risk. We've started to see it in the property catastrophe area, where unfortunately we've seen quite a lot of tragic events in the last 12 to 18 months. We're starting to see prices move up and we think those three names should be able to benefit very well.

What does MetLife (MET - Get Report) do well that other insurers don't?

Sleeman: MetLife is one of the best life insurance franchises in the world. Their acquisition of Alico in Japan enables them to diversify the risk in their portfolio and without a great deal more investment exposure. We are quite bullish on life insurers because we think interest rates are bound to rise over the next few years, and life insurers should be able to get better investment returns on their assets. So we own a fantastic franchise with a creative transaction that hasn't been priced in and possibly better fundamentals as we move forward.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,318.94 -97.91 -0.56%
S&P 500 2,003.42 -17.83 -0.88%
NASDAQ 4,663.6870 -19.72 -0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs