Smith & Williamson has swapped Henry Dixon’s Man GLG Undervalued Assets fund for Monks Investment Trust in its managed portfolio service as the team scales back its value slant.
Dixon’s £1.4bn fund, which he runs alongside Jack Barrat, has enjoyed a stronger run this year, with its plays on energy, materials and banks benefitting from the domestic recovery from the coronavirus pandemic.
It is now in the second quartile of the IA UK All Companies sector on a one-year view, returning 32.9% against the 30.1% sector average, though returns are some 14% lower than peers over three years.
“Across the board we remain very positive on UK equities as a whole, and although the Undervalued Assets fund could benefit from its positioning in the mid-cap space, we were conscious that a number of our more growth focused managed portfolios were skewing towards value,” said S&W MPS co-manager James Burns (pictured).
See also: Has the sun set on value or just the value manager?
Monks added for exposure to fast growing US companies
The investment team used the proceeds from the sale of Man GLG Undervalued Assets to initiate a holding in Monks Investment Trust in its growth focused portfolios.
While not “an explicit US play” Burns notes the trust has a decent chunk of the portfolio in US stocks and “is focused on areas we believe future growth is going to come from”.
Around half of the £3.3bn trust, run by Spencer Adair, is invested in North American equities, according to Trustnet, with e-commerce giant Shopify, Google parent Alphabet, credit rating agency Moody’s and Amazon among its top holdings.
The L&G UK 100 Index Trust was also added to the MPS. Despite having some exposure to value names, Burns said the fund is “overall more balanced” and, similar to its positions in Ninety One UK Alpha and Artemis UK Select, likely to benefit from the continued UK recovery.
Other funds given the boot
In addition to selling Dixon’s £1.4bn fund, the team also cut its position in the Artemis US Extended Alpha fund.
Positions in Nick Purves and Ian Lance’s RWC Enhanced Income fund were also axed from two portfolios with the money redirected into the pair’s RWC UK Equity Income fund.
“Although the RWC Enhanced Income fund provides a good yield, the strategy’s call option means it has a capped upside. We moved to the RWC UK Equity Income fund instead, which continues to provide yield but also is able to benefit more from its equity positions,” Burns explained.
In emerging markets, Schroders Asia Total Return was also given the boot, with the team picking up the PineBridge Asia ex Japan Small Cap Equity fund instead.
“We were conscious that we held two Schroders strategies in our Equities – Developing allocation, and therefore initiated a position in the PineBridge fund to diversify manager risk,” Burns said.
S&W adds to alternatives as fixed income remains ‘unappealing’
On the fixed income side, the team took its corporate bond exposure down in three portfolios by exiting the Royal London Corporate Bond fund.
Burns said the team remains underweight to fixed income which looks “unappealing” compared to equities and alternatives.
There was also movement on the alternatives front with the team boosting its exposure to Neuberger Berman Uncorrelated Strategies across portfolios.
It also added to positions in Empiric Student Property Reit which the team purchased in May as it traded on depressed valuations.
At the top of the year S&W initiated a position in the Blackrock Gold & General fund to counter the risk of higher inflation.
