Co-head of BMO Global Asset Management's multi-manager team Gary Potter (pictured left) has predicted the Investment Association's UK Equity Income sector will be the best performer next year.
In a webinar, the co-head, who announced his retirement last week (15 November), said income was very important at the moment and companies are returning to dividends after the pause due to Covid.
Potter went on to say the team is taking a "cautious but not bearish" approach to its portfolio and is adding more protection in the form of options.
This protection amounts to about 10% of the portfolio, which costs about 12bps of performance, he said.
Potter said this cautious approach is what has led to a recent lag in performance of the range when compared to its peers.
In the month to 23 November, the IA Flexible sector returned 2.2%, while BMO Navigator Growth, which sits within the sector, returned just 1%. Meanwhile, BMO Navigator Distribution was the only fund of the range to outperform the IA Mixed Investment 20-60% sector. The BMO fund returned 1.6%, while the sector returned 1.5%.
Potter said he anticipates the £541m Distribution fund to be the best absolute performer of the range for 2022.