Fidelity portfolio manager Will Danoff is bullish on bank stocks.
Danoff’s Fidelity Contrafund is one of Wells Fargo’s biggest investors, reports Barron’s. The $113 billion fund has returned 7.5% annually in the last 10 years, compared to the S&P 500’s 4.4%. Danoff says that Wells Fargo will “benefit materially” when interest rates rise.
“If rates rise, price-to-earnings ratios may contract and the overall market may suffer modestly. But I believe certain sectors of the market could benefit from rising rates, most notably banks. Conversely, I think REITs and utilities likely will suffer,” he says.
Bank stocks have been popular this year as investors anticipate an interest rate rise. Higher rates mean higher profitability for banks.
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