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MAM considers changing Balanced fund name in strategic overhaul
The CF Midas Balanced Growth fund may get a new name, says new manager Simon Callow, who has re-oriented it towards emerging markets.
Callow inherited the fund last June when former chief executive Simon Edwards left the firm, and has since been working to alter its composition, adding the ability to use exchange traded funds (ETFs) for the first time and re-orienting towards emerging markets.
He said there had been internal discussions that the term ‘growth’ in the title was no longer appropriate, and perhaps the fund had more of an ‘absolute return’ feel which should be reflected in its name.
The fund is ranked 22 out of 119 in the Mixed Investment 40-85% shares sector, but has slightly underperformed over the past three years, returning 35.16% compared with 37.9% in the LCI Mixed Asset GBP Balanced Global benchmark.
Since Callow took the reins, ETFs have been added for the first time, and he has seen success from shorting the FTSE 100 through use of a db x-tracker. He is also hoping to replicate this good call with a short position on the S&P 500.
‘We felt that the FTSE was fully priced so we increased the size of the DBX short and made some money on that as the FTSE fell,’ he said. ‘We think the S&P is at the top of its cycle and we have a suspicion that we will see profit warnings from a number of companies.’
Callow describes himself as an inflationist and believes the eventual outcome of quantitative easing will be inflation reverberating around the globe.
‘We believe that quantitative easing will ultimately result in inflation and it will also be exported from Asia and emerging markets back to Europe,’ he said, adding that on the back of these fears he has bought in to the fund.
Since taking over Callow has sought to give the fund a more international slant to benefit from corporates in emerging markets with healthier balance sheets.
‘We have created a framework to try and exploit that opportunity,’ he said. ‘So we have started to move the fund into a more international perspective and we have been doing that over the last 12 months.’
He is concerned as to how sterling will fare in future and has sought to diversify the currency base with exposure to the Singapore dollar and Norwegian krona – both of which he believes will appreciate against oil.
‘We are quite worried about the outlook for sterling and we have diversified the currency base so we are 60% sterling and 40% overseas currencies,’ he said. ‘Norway has a negligible budget deficit because of the tax receipt from their oil, while Singapore has substantial assets with which to finance their assets.’
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