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Hawksmoor’s Scott and Lockyer prepare for inflation's return
Markets
by Matthew Goodburn on Dec 18, 2012 at 00:01
The managers have just added Alice Gaskell’s BlackRock European Income fund on Scott’s view that ‘the love of America and hatred for Europe is overdone’.
The pair also view Europe as having a more diversified spread of income producing companies than North America.
Lockyer said that Vanbrugh’s fixed interest exposure had been the ‘Achilles heel’ last year, with the lack of gilt exposure proving costly.
This year of owning gilts has not hurt performance as much and he described the fixed income portion of the fund - which accounted for around a third of assets – as more concentrated. The first and third biggest holdings are strategic mandates through Peter Harvey’s Cazenove Strategic Bond and Ariel Bezalel’s Jupiter Strategic Bond at 7.1% and 6% respectively.
The pair recently trimmed their holding in Peter Eerdmans’ Investec Emerging Market Debt fund. Despite their long-term belief in the area, it is an area that has become relatively hot for investment groups and investors alike recently.
Lockyer said: ‘The yields are still attractive relative to many western bond markets but it is not an undiscovered area any more.’
While the pair remain wary overall on high yield, they favour the Baillie Gifford High Yield Bond fund for its relatively cautious approach.
Elsewhere, the fund has around 25% in investment trusts, although this has been reduced down from 28% since the summer after fixed income trusts from Neuberger Berman and New City were sold down.
Betting on private equity rerating
Lockyer said: ‘They were trading at high premiums already and as we were already concerned about high yield we reduced our positions.’
The pair have some 7% of the fund in private equity, including positions in Electra, HgCapital, F&C Private Equity and Graphite Enterprise. Many of these trusts are still trading at 20% discounts, but the pair are confident that sentiment towards the sector is set to improve over the coming months.
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