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View the article online at http://citywire.co.uk/wealth-manager/article/a746847

M&G’s Rhodes sells BlackRock for Aberdeen income opportunity

by Dylan Lobo on Apr 17, 2014 at 10:42

Technology opportunity

While Rhodes has sold out of a number of US stocks, his exposure to the US has not dramatically fallen as he sees dividend opportunities in technology stocks.

He owns some of the biggest names on the market including Microsoft, Qualcomm, KLA Tencor, Xilinx and Avago, which yield between 7.1% and 10%.

Rhodes admits the technology sector has been an area he has historically struggled to find opportunities in, but reckons attractive valuations and a greater commitment to dividends offers great potential to income investors.

‘The US technology sector is a silver lining and has rescued our US exposure. When we launched the fund (in July 2008) the technology sector was difficult to find opportunities in but that has now changed materially.

‘A lot of technology firms have been increasing their dividends by 20, 30 and 40% over the last four years.’ 

Other key changes to the fund in the first quarter include a ‘significant’ reduction in consumer staples, which has contributed to the number of stocks in the portfolio falling to an all-time low of 46.

However, this does not necessarily reflect a lack of opportunities in the market, but rather faith in current holdings.

‘We are very comfortable investing in existing names,’ Rhodes said.

Performance

Rhodes protected his performance in 2013 by a pronounced move to a value strategy.

‘In March and April of 2013 we shifted the portfolio to enable us to stand up when a value rally came in,’ he explained.

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