This Day On The Street
Continue to site
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

Bet on Insurers in Second Half, Investor Says

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

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
NYX $0.00 0.00%
MET $52.16 0.33%
PRE $126.90 -1.10%
RNR $103.17 0.08%
VR $42.31 0.24%

Markets

DOW 18,089.62 +65.56 0.36%
S&P 500 2,117.88 +9.59 0.45%
NASDAQ 5,032.9770 +27.5860 0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs