Thomson dropped US discount retailer Dollar Tree from his £183.45m Rathbone Global Opportunities Fund after becoming concerned about a “deterioration” in the company’s fundamentals.
The stock was previously the fund’s seventh largest holding and a key element of the manager’s ‘weather-proofing’ strategy.
“Dollar Tree experienced surprise decelerating growth,” he said. “It’s hard to put a finger on exactly what’s happening but given the overall robustness of the US consumer it raised some warning flags for me.”
The strength of the US consumer has been a bright spot in economic data recently. The Reuters/University of Michigan’s consumer sentiment index advanced to 84.9 points in October, which is its highest since July 2007.
Increasing consumer confidence led Thomson to initiate a new holding in payment processing firm Mastercard and add to his existing position in online retailer Amazon.
“I still own zero banks in the fund but I hold companies like Visa and Mastercard in the financial space … as they’ve proven an areas of resilient growth,” he explained. “With Amazon, I’m starting to realise they have become a one-stop shop for the retail experience.”
Despite the recent purchases, Thomson has kept the fund’s cash allocation at about 18%. The fund has had a cash weighting above 15% since the summer, despite this acting as a drag on performance during market rallies.
“My view is that I will slowly and selectively put my cash to work. I don’t tend to take big-bang bets where I put all my cash to work suddenly,” he said.
The Rathbone Global Opportunities Fund latest factsheet shows it was fourth quartile over the six months to 31 October 2012, losing 1.22% against the IMA Global sector’s 0.78% gain.
However, over one year the fund is third quartile with returns of 4.45% compared with the sector’s 4.34% and first quartile over three years after a 37.08% return against the peer group’s 19.59%.
