Thursday, May 12, 2011

Another Value Investor Using Gold As Portfolio Insurance

Renowned value investor Jean-Marie Eveillard has been using gold as portfolio insurance for some time now. He's joined by Pimco's new manager for its Equities Pathfinder fund, veteran money manager Anne Gudefin. She likes Microsoft and consumer-staples stocks, but also likes gold.
Your fund has the ability to invest in all types of securities. Other than value stocks, what do you like?

The largest position in the fund is gold, which we think is a very good form of protection against what can go wrong. We were encouraged by the fact that a lot of the central banks, especially in Asia, are big buyers. We think that's an underlying trend that's very favorable for gold.
Her preference for consumer-staples companies that are #1 and #2 in their field is in part inflation-inspired. Those companies, she avers, can pass along cost increases to consumers: they have pricing power. Ones lower on the list don't, as they can be squeezed out by generic brands.

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