Ravenscroft Stockbroking & Investment Management is seeking investors’ permission to amend its Huntress Global Growth fund of funds to clarify its bond exposure.
The wealth firm is proposing changing the fund’s objective from investing ‘primarily’ in equities to investing in both global equity and bond markets.
Ravenscroft also wants to tweak the fund’s intended exposure from up to 100% in equity-related securities or cash equivalents to state explicitly that it will invest up to 50% in bonds.
‘Whilst the option of investment in bonds was always permitted, the manager felt that this option was not appropriately disclosed,’ Ravenscroft told investors.
The group added that the growth fund has historically avoided bonds in order to differentiate it from Ravenscroft’s other products, and maintained that it would ‘always be predominantly equity orientated’, but explained that ‘having the ability to use bonds in the portfolio will add value over the long term’.
Managed by Ravenscroft’s investment team, which is headed by Sam Dovey, Huntress Global Growth has returned 18% since inception in 2011 compared with 28% from the MSCI World index.
The fund’s top holdings – each representing more than 13% of the portfolio – are currently Citywire AAA-rated Nick Train’s Lindsell Train Global Equity, A-rated Stuart Rhodes’s M&G Global Dividend, and AAA-rated Terry Smith’s Fundsmith Equity.
The Ravenscroft team recently noted that the performance of the £8.5 billion M&G fund had dipped at the start of this year.
‘For us, a period of weaker performance isn’t something that we should worry about unduly,’ commented Ravenscroft portfolio manager Sophie Yabsley.
Yabsley attributed Global Dividend’s slowdown to its high exposure to emerging markets and cyclical stocks, exemplified by a 3% weighting to Occidental Petroleum, whose share price dropped 8% in January only to rally 10% the following month.
‘Aside from these short-term price fluctuations, the fundamental reasons why M&G invests into Occidental Petroleum remain intact and, in turn, so do the reasons why we invest into the Global Dividend fund,’ said Yabsley.
‘Thanks to excellent relationships and absolute transparency from the underlying fund manager, as well as a strong and well resourced in-house research team, we do not need to react impulsively on the back of short-term market movements.'