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M&G's Dobell goes underweight miners
by Matthew Goodburn on Oct 04, 2012 at 10:38
Dobell said that after two of his AIM-listed mining stocks had been taken out by corporate action earlier this year, the fund was now under the benchmark weighting for commodities.
He also dismissed concerns over the size of the fund, insisting it continued to have a scalability.
'We are often accused of being a commodities fund and [at the end of June] were 2% overweight the commodities benchmark but this overweight was not due to miners but to our two big chemical stocks Johnson Matthey and Croda. We are now underweight the mining sector for the first time for a while.'
He also expressed his aversion to many of the largest mining stocks, adding that the fund was not invested in any of the biggest nine miners, including what he described as the 'ghastly' Xstrata and 'frightful' Vedanta.
Despite this view, his three biggest active fund overweights are currently First Quantum Minerals, Kenmare Resources and Tullow Oil, with Dobell buoyed by their long term prospects after a recent trip to Southern Africa. He and deputy manager David Williams expressed disappointment at the recent performance of African Minerals but continue to back the stock.
Dobell described the fund's short term performance as 'lacklustre' as strong performance in 2009 has started to drop out of its three year numbers, despite strong long term performance. The fund is roughly in line with the FTSE All Share so far in 2012.
'There has been no change to our investment process. Over a 12 year period since I took on the fund in March 2000 performance has been reasonable but it has been lacklustre recently. We are seeking to preserve capital but are not going back into our shell. We are in line with the market year to date and are weathering this painful period.'
He also expressed his hope that M&A would help boost performance over the coming months.
'We operate a strict one in one out policy. A common exit for us is often a takeover of a company. We have noticed that M&A has been in short supply. We have had two this year and none last year but we expect this to start to help the fund dramatically.'
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- Xstrata PLC (XTA.L)
- Vedanta Resources PLC (VED.L)
- Kenmare Resources PLC (JEV.L)
- First Quantum Minerals Ltd (FQM.L)
- Tullow Oil PLC (TLW.L)
- Johnson Matthey PLC (JMAT.L)
- Croda International PLC (CRDA.L)
- Amec PLC (AMEC.L)
- Entertainment One Ltd (ETO.L)
- Kingspan Group PLC (KSP.L)
- African Minerals Ltd (AMIq.L)
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