View the article online at http://citywire.co.uk/money/article/a884809
Global income star cuts banks and buys more Apple
Jacob de Tusch-Lec ups exposure to defensive stocks like utilities amid volatility and buys more Apple on dividend hopes.
Top-performing global equity income manager Jacob de Tusch-Lec has cut his exposure to financial stocks amid market volatility, increasing his holding in defensive stocks like utilities.
The Citywire AA-rated manager of the Artemis Global Income fund has been increasing the fund's holdings in defensive stocks since last summer, but was still hurt by holdings in riskier companies as markets tumbled at the beginning of the year.
‘Over the last three to four months there has been a move away from very geared cheap stocks and financials towards things like higher growing income stocks, such as tobacco that are more defensive than the usual industrials,' he said.
'Although we began to adopt a more defensive stance last summer we also struggled in this new environment,' he added. 'After five years of strong returns, the last three months have been more challenging.'
De Tusch-Lec has cut financials to 24.9% at the end of January from 27.0% at the end of December. It remains the largest sector in the fund but he has no banks in the top ten holdings.
He has added to his holdings in the US, up to 35.2% of the fund at the end of last month, from 31.6% in November, believing it offers more safety than Europe.
US conglomerate General Electric (GE.N) and technology giant Apple (AAPL.O) are the second largest holdings in the fund at 2.5% each. De Tusch-Lec has increased the position in Apple from 1.4% in June 2015, as he thinks dividends are set to grow.
‘We've also added to Apple, which is a bit of a controversial call, but I think at this point in time it is not a bad place just to sit and wait because everyone knows what is wrong with Apple, everyone knows we are saturated with iPhones,’ he said.
‘But it is a company that is generating a hell of a lot of cash and they can grow the dividend quite dramatically over the next couple of years. That is a yield that is much lower than the rest of the fund, but I expect them to grow the dividend much quicker.‘
De Tusch-Lec thinks the commodity sector could provide opportunities in the future but is not yet ready to invest. After the mining company BHP Billiton (BLT) cut its dividend, the manager thinks it looks more attractive.
‘BHP Billiton in my mind is more investible now than they were before the dividend cut. Before they cut the dividend, they knew that this was not a sustainable dividend policy they had and the market was telling us that. Now they are at least acknowledging that they need to reset expectations.’
‘Commodity prices showing absolutely no signs of coming back to life, but there is no doubt that the space is becoming more and more interesting every day but I'm still quite happy sitting on the side lines for an income fund,’ he said.
The Artemis Global Income fund has returned 34.3% over the last five years, versus the 17.2% average return from funds in the Investment Association's Global Equity Income sector.
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by Gavin Lumsden on Oct 28, 2016 at 16:26