Chief investment officer Neil Birrell said the number of equity holdings in the UK portfolio has increased by 62% over the past 18 months, from 24 to 39.
The overall number, including global holdings, now stands at 93, compared with 76 held 18 months ago.
Birrell (pictured) said the exposure is now more diversified by geography, sector and company size which reduces portfolio risk in the more difficult market conditions experienced at this stage in the cycle.
He said: “We were getting to the stage where some individual holdings were becoming a bit large, about 1.5-2% of the whole portfolio, and while we still like them, the valuations were getting a bit stretched. We reduced the exposure by trimming it and moving the number of holdings up. That has been a gradual process.”
According to FE, the fund’s equity exposure is 22.6% to UK, 17.2% to US, 7.7% to Europe, 4.7% to Japan and 4.3% to Asia Pacific ex Japan.
Growth vs cyclicals
In the UK, Premier sold out of online takeaway delivery firm Just Eat in March, just prior to the company’s results, and it has reduced its holding in fitness firm Gym Group.
Elsewhere, it has reduced some of its tech exposure in the US in favour of more cyclical stocks, including financials, that are typically on lower price-to-earnings (PE) multiples and tend to do well in a rising interest rate environment.
“That is not in the Facebooks and Googles, much more in the companies that are making the bits and pieces for them and we have gone into more cyclical-type things, like Volvo the truck manufacturer, and European banks, like Erste Bank and KBC Bank, that have good domestic franchises,” he said.
Premier also bought into Citigroup in the US when markets sold-off in February.
“[Financials] are trading at big discounts to consumer staples and they are growing faster and have momentum going for them,” Birrell added.
According to FE, the Premier Diversified fund now has 11.74% in financials and 6.08% in technology.
The fund is top quartile ranked over three and six months as well as over one three and five years. It has produced returns of 8.9%, 32.1% and 47.2% over one, three and five years respectively, versus the IA Mixed Investment 40-85% Shares sector’s 1.8%, 15.5% and 34.6%.
