Marcus Brookes and Robin McDonald added Philip Wolstencroft’s fund to their Cazenove Multi-Manager UK Growth Fund during the third quarter as they rotated the £127.9m portfolio towards “selective areas of cyclicality”.
The Artemis Capital Fund, which has 15.7% of its portfolio in oil and gas stocks and 12.9% in banks, now accounts for 9.9% of the Cazenove fund’s portfolio, making it the sixth largest holding.
“It is difficult to suggest that a full-blown economic recovery is underway as yet,” the managers said.
“However, we are conscious that in certain sectors in the UK market, valuations now more accurately reflect the somewhat muted global backdrop.
“As such, on a risk/reward basis, we remain relatively happy increasing our exposure to selective areas of cyclicality, be they financials, retailers, media et al.”
Brookes and McDonald added that the fund has moved out of some more cautiously positioned names.
Earlier in the quarter, the managers revealed that they had sold out of Woodford’s £9.3bn Invesco Perpetual Income Fund, which is heavily weighted towards pharmaceuticals and tobacco. The fund was previously a top-ten holding of Cazenove Multi-Manager UK Growth Fund.
In addition, Brookes and McDonald sold Jan Luthman and Stephen Bailey’s £116m Liontrust Macro UK Growth Fund. This portfolio, which is more than one-fifth invested in healthcare stocks, was also a former top-ten holding of the Cazenove fund.
“In our eyes, the valuation dispersion that has arisen between relatively expensive defensives and some of the more unloved cyclical areas warrants a greater allocation to the latter at this stage,” the managers concluded.
