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Tech is top for Aubrey fund manager
Forget about Apple’s shock profit miss, technology remains the best sector for Andrew Dalrymple’s Aubrey Global Conviction fund.
Apple recently shocked investors when its mid-year sales fell short of expectations, prompting fears that the technology sector may not be so resilient to the economic downturn.
Nonetheless, the sector has wooed investors so far this year with strong growth and healthy returns, and is often touted as the most loved investment among fund managers.
Technology has contributed the most to the fund’s performance so far this year, he says. ‘Year to date our best stocks have been technology stocks, particularly in the first quarter. Quite a lot of tech stocks are up between 20% and 30%, which has been very good for us, and Apple has been great and is up 50% year to date.’
However, the fund has recently reduced its technology holdings, a move which has become a growing trend according to a Merrill Lynch survey of fund managers conduced at the start of July.
‘We have reduced our holdings but only partly because we came close to our limit, and we were at about 20% in software and services, so we took quite a lot of our holdings down but otherwise we’ve still got a pretty high weighting in technology. We allow ourselves plenty of latitude, but we don’t want be a single issue kind of fund,‘ Dalrymple says.
The Aubrey Global Conviction fund has given a total return of 51.7% over the past three years, to outperform the FTSE World index's total return of 45.2%. Dalrymple received a Citywire AA rating in May and an A rating in June, though has slipped out of the ratings this month.
Perhaps surprisingly, as the US economy struggles, US retailers have been another area of strength for the fund: ‘The retailers we’re most interested in are the less economically sensitive. These are not super luxury retailers but they’re catering to the well-heeled people, so they have done very well for us too. We always find very rich pickings in the US retail sector. Generally over the five years we’ve run this fund we’ve made very good money consistently from US retailers.’
However, the US economy hasn’t proved to be immune to the eurozone crisis, and the fast-approaching fiscal cliff could push the country back into recession.
‘It’s of concern, and a lot of our retail stocks have been quite poor in the last month or so. But one has to take a slightly longer term perspective on these things, and if I take sports retailer Lululemon Athletica, it’s still up 16% year to date and AutoZone is up 17% – that’s the US equivalent of Halfords. Ulta Salon, which sells cosmetics in stores across America, is up 42% year to date,' Dalrymple says.
‘So it’s important not to get too blown off by short-term retail numbers or perhaps even a slight quarterly disappointment. The US market is obsessed with quarterly numbers, which is a great pity I think as it’s only a very short period of time, 12 or 13 weeks of a company’s life, and sometimes people can be very harsh on stocks that have had a difficult quarter, but we try to look through that if we can.’
However, he concedes there are some sectors and regions that aren’t attractive that he avoids investing in.
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