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Fly on the wall: what Dart Capital bought and sold

by Annabelle Williams on Feb 05, 2013 at 08:59

Fly on the wall: what Dart Capital bought and sold

Last month Wealth Manager was given exclusive access to Dart Capital’s year-end asset allocation meeting, where the team evaluated whether their decision to raise exposure to fixed interest and slash commodities had paid off.

The firm, which is headed by chief executive Richard Whitehead (pictured) and operations director Matthew Wille, has £195 million in assets under management with an average client size of £1 million, and a £250,000 minimum investment level.

The average balanced or medium risk portfolio, which has 63.9% in equities and 23.3% in fixed interest, achieved an 8.4% return in 2012 net of fees, which Whitehead says he is pleased with.

‘[Performance] is quite satisfactory considering the amount of defensive positioning at times last year. We have avoided long-dated gilts and focused on credit within fixed income,’ he explained.

Whitehead held short-dated gilts alongside cash to hedge against the regular bouts of volatility which he saw as ‘inevitable’. The medium risk portfolio was protected during the tougher month of May with one of Dart Capital’s strategies of having an especially low beta of 0.42, well below its budget of 0.5.

‘This is one of the lowest numbers we have had for a long time. Some of that is going to the stability that the bond market is operating in, it’s an almost false level of volatility. But I don’t want to be lulled into a false sense of security there,’ he said.

‘You would have expected more volatility than that. It just shows the enormous appetite there has been to rotate out of gilts and cash.’

Moving out of alternatives

Dart Capital has been gradually moving money away from alternatives in favour of fixed interest, and within that has been increasing short duration exposure, adding to the Smith & Williamson Short Dated Bond fund.

‘That has worked very well for us this year,’ he said. ‘Our tactical shift against absolute return early in the year and alternative strategies has worked. Any holding in commodity-related areas has been poor but thankfully we did not hold much.’

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