Fossil fuel stocks are in for a bumper year as oil prices climb to their highest level since 2014. Demand for fuel has jumped back to pre-pandemic levels and share prices are sure to benefit, particularly after a lack of investment in new wells. Dividends are expected to be generous.
However, £3bn money manager Carlos Moreno refuses to put a single penny into such stocks. Mr Moreno, who runs the Premier Miton European Opportunities fund, has steered clear of oil companies since the fund’s launch in 2015. He admits it may not be the best short-term strategy but says it is crucial in the long run.
Thus far, it has paid off. The fund has made more than double the returns of the benchmark index since launch, growing by 210pc versus the market’s 103pc. Investing for short-term wins should be left to fancy algorithms, according to Mr Moreno, who is solely focused on the shape of tomorrow’s world. He tells Telegraph Money how he picks stocks that will be the household names of the future.
Who is the fund for and why invest in Europe?
It’s for anyone who wants exposure to quality companies that will keep growing for a long time.
British investors tend to have too much of their savings in UK stocks. It’s funny that Europe is a backwater for UK investors when it is their neighbour. But it’s a very wealthy continent that is technologically advanced and has 360 million inhabitants. It is a very big market to invest in and as attractive a region as anywhere else.
How do you pick stocks?
We focus on companies that are going to be very big tomorrow, whose best days are ahead of them. We want the ones that will be household names in the future.
We like highly profitable businesses because they can reinvest in themselves and deliver good cash flow, which drives dividends.