Smith & Williamson Investment Management has dumped Anthony Cross’s Liontrust Special Situations fund from its managed portfolio range in its latest rebalance, while a Blackrock bond fund has also been dropped for cheaper alternatives.
The Liontrust Special Situations fund, managed by Cross (pictured) and Julian Fosh, was added to Smith & Williamson’s core range of model portfolios in December 2019.
In the year to date, the £5.4bn fund has fallen 12.7% but has still significantly outperformed its peers in the Investment Association UK All Companies sector, which have seen average falls of 20.4%, according to FE Fundinfo. The FTSE All Share has fallen 24.8% over the period.
“Our decision to reallocate is mainly down to wanting to focus our list of UK equity funds,” said co-head of the managed portfolio service James Burns in a press release sent about the latest rebalance.
Proceeds were added to existing positions, including NinetyOne UK Alpha, managed by Simon Brazier, which also sits in the IA UK All Companies sector and has fallen 19.7% over the year to date. Fellow IA UK All Companies constituents Artemis UK Select and Man GLG Undervalued Assets were added to the growth portfolio. The pair have fallen 18.4% and 34.6% respectively in the year to date.
Blackrock Smaller Companies and Miton Multi Cap Income were also added.
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The Japan fund that has delivered stellar returns for Smith & Williamson
Exposure to the UK has not increased in the Smith & Williamson portfolios despite it being “cheap and unloved”, according to Burns. But the growth portfolio’s significant underweight to the UK has been “partially neutralised”.
“All of our portfolios remain underweight for the time being, although we feel that there may be an opportunity later in the year to address this, as the direction of travel over Brexit becomes clearer.”
US, Japan and Asia have done well for Smith & Williamson during 2020 “in some cases spectacularly so”, he said, pointing to JPMorgan Japan as an example. The £1.8bn fund has returned 30.3% in the year to date compared with 4.1% average returns in the IA Japan sector and falls of 6.3% in the Topix.
Exposure to the fund, managed by Shoichi Mizusawa and Miyako Urabe, has been trimmed in higher risk portfolios, alongside Vanguard US Equity Index and Schroder Asian Alpha Plus.
Expensive Blackrock fund removed
Another position sold from portfolios was Ben Edwards’ Blackrock Corporate Bond fund.
Smith & Williamson said within fixed income cost has become increasingly important in a world of tumbling interest rates. For that reason, three quarters of proceeds were added to the Artemis Corporate Bond fund, which was praised for its competitive 0.40% OCF at launch in September 2019.
Edwards’ bond fund has an OCF of 0.57%.
The remainder of proceeds were added to Liontrust Monthly Income or Royal London Corporate Bond, which have fees similar to Blackrock.
Burns said: “Overall, we are conscious that having held firm on our pro-equity stance until now, there are more clouds of uncertainty on the horizon. This is primarily amid concerns over the US election and the ongoing global coronavirus crisis.
“As such, it was prudent to reduce our equity exposure in our portfolio models where it was getting to be sizeably overweight in equities. We have also looked to reduce portfolio costs in our fixed income allocation.”
Nevertheless, Smith & Williamson remain 0.1% to 2% overweight in equities across portfolios.
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