AXA’s Peirson targets US growth

AXA Framlington’s Richard Peirson has moved his focus away from emerging markets to line up with UK-based companies benefiting from growth in the rebounding US economy

Richard Peirson, the Citywire A-rated fund manager of the AXA Framlington Managed Balanced fund, is moving away from emerging markets and honing in on UK-listed equities with exposure to the US economy.

Peirson was optimistic about the US economy throughout 2011, despite negative predictions by strategists. Although he is not shunning emerging markets, he is targeting companies that are benefiting from US growth. He has been buying Vodafone, a stock he sold in 2010 due to poor performance in Europe.

‘Three or four years ago we made sure the UK equities part of the portfolio was concentrated on companies that had a focus on emerging markets, because they are the fastest growing parts of the world. But for the past year, we’ve changed that and we’ve tilted the balance,’ he said. ‘The theme now is exposure to the US because it has been quite clear to us for some time that the US economy is improving.

‘Vodafone was a long-term investment that we sold in 2010, but we bought it back again in early 2011,’ he said. ‘Vodafone is a great example of an international company that is benefiting from the US economy. Its US mobile business, unlike its European side, was doing very well and we bought them on the expectation that they will pay a dividend.’

Another example of a UK equity stock which echoes the US story is publishing company Pearson, which is also benefiting from digitalisation.

‘Pearson’s US-based business has been developing its online delivery. Historically its specialist journals were paper-based, but it has become increasingly digitalised and is going online,’ said Peirson.

‘Although there was a huge headwind as colleagues and universities were making cutbacks on spending, the company itself is in good shape. It is ahead of the curve in the way it delivers information and it will continue to do well,’ he said.

Conviction on stock selection

Peirson has no plans to increase the equities allocation in the fund, which is 78% of the portfolio; but this is not due to a negative outlook on equities, but more from high conviction in his current stocks.

In the latter part of 2011 the manager became less active in terms of changes to the equity side of the portfolio. Although the overall fund has 11% in cash, he does not intend to put any of that into more equities.