View the article online at http://citywire.co.uk/money/article/a610415
Fund managers choose career safety – loading risk onto investors
Popularity of bonds that offer below-inflation returns is a symptom of career risk aversion, JOHCM UK Opportunities manager John Wood says.
At the end of June GlaxoSmithKline (GSK.L) remained the fund's largest position, (4.2% of the portfolio) followed by catering firm Compass (CPG.L) and consumer goods giant Unilever (ULVR.L) (3.8% each).
Wood increased the fund’s cash from 4.4% at start of the year to peak at 15% in April. It has stayed at relatively elevated levels – 13.5% at the end of July – as Wood and co-manager Ben Leyland await further market falls to top up on their favoured long-term holdings.
Over five years to 3 August the fund had posted a return of 36.7% compared with 11.6% by the FTSE All Share.
Citywire Selection verdict:
This is the least volatile fund in the UK All Companies sector over three and five years yet comfortably outperforms the index. Such a unique risk/reward profile is rare. Wood and co-manager Ben Leyland focus on stocks and sectors that generate high returns on capital, which they believe is vital in a low growth environment. This astute approach helps the fund outperform, especially in downward markets, with Wood also holding over 10% in cash when valuations are deemed too high.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
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- GlaxoSmithKline PLC (GSK.L)
- Compass Group PLC (CPG.L)
- Unilever PLC (ULVR.L)
- Imperial Tobacco Group PLC (IMT.L)
- British American Tobacco PLC (BATS.L)
- Reed Elsevier PLC (REL.L)
- Next PLC (NXT.L)
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by Chris Marshall on Mar 12, 2014 at 10:12