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Hawksmoor’s Scott and Lockyer prepare for inflation's return
by Matthew Goodburn on Dec 18, 2012 at 00:01
Phoenix Hawksmoor Vanbrugh fund managers Richard Scott and Daniel Lockyer are positioning for what they believe will be a future inflationary environment, sparked by further quantitative easing (QE) working its way through the financial system.
Inflation to return
Richard Scott said that two core holdings, M&G UK Inflation Linked Corporate Bond and Kames Inflation Linked Bond now accounted for around 10% of the portfolio in anticipation of inflation returning over the mid-term.
While Scott said he was unsure of the exact timing, when inflation did strike it was likely to happen quite quickly, so he and Lockyer are taking pre-emptive action to protect investors.
Scott told Citywire: ‘It’s a bit like Noah’s ark. You have to build your position before it happens. QE is a serious risk and it is hard not to see inflation further out.’
While not owning gilts last year hurt short-term numbers on the Citywire Selection Watchlist fund, Scott conceded that his inflation-linked bond exposure may also cause short-term underperformance in the next few months, but ultimately the stance would be justified.
‘It may hurt numbers for a little while but this is a cautious fund and we think it is wise to be prudent.’
Scott said the launch of the duo’s income-focused Hawksmoor Distribution fund earlier this year had led them to become more cautious overall on the Vanbrugh fund over the past few months. The Distribution fund, which is yielding around 4.2%, sits in the Apcims Balanced Managed sector and is run as a slightly more adventurous mandate. phoenix hawks
The Vanbrugh fund has around 25% in equity income with the emphasis on global income, and key stakes in Prusik Asian Equity Income and Veritas Global Income.
Adding to European equities
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- Phoenix Hawksmoor Vanbrugh A Inc
- M&G UK Inflation Linked Corporate Bond A Acc
- Kames Inflation Linked B GBP Acc
- Jupiter Strategic Bond Acc
- Cazenove Strategic Bond B Acc