As the financial sector posts strong gains so far this year, one portfolio manager thinks now may be the second best time in history for investors to own these stocks.
“This is an industry that goes in cycles,” said David Ellison, portfolio manager at FBR Large Cap Financial Fund. “We’re at the bottom of a cycle — it was a very bad cycle and one that I hope not to be invited to again next time before I retire.”
The FBR Large Cap Financial Fund has risen more than 20 percent so far this year, while the KBW Bank Index has jumped more than 50 percent from its October lows.
Although this is not an industry that investors should hold for decades, Ellison said they can add value to portfolios by holding these stocks and waiting for the execution of value.
“I think the financials are obviously much healthier than they were three years ago,” he said.
Just as stocks within the industry previously fell together, they are now rising in unison, he added.
For investors searching for dividend growth, Ellison pointed to JPMorgan Chase as a good place to look.
“Clearly JPMorgan is ahead of everybody — primarily because of the very fortuitous acquisitions that they made that allowed them to maintain their capital and grow their book value through the entire cycle,” he said.
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Disclosure information was not available for David Ellison.
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