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Peformance review: Walker Crips turns bearish on UK equities
on Jan 30, 2014 at 10:24
On the alternatives side, he has a 5% allocation to infrastructure, which he favours for its stable cash flows and growth potential.
Within fixed income, he is bearish on corporate and high yield bonds, which he deems overvalued, but has added to his 8% strategic bond exposure with the recent introduction of the Alliance Trust Dynamic Bond fund. ‘We like the team’s style, as they are willing to sell the duration down with a derivative overlay to protect the capital, therefore providing genuine diversification for the portfolio.’
Over 12 months the portfolio has returned 6.6%, underperforming its FTSE Apcims Stock Market Income Index benchmark, which rose 10% over the same period. Since inception in June 2012, the model is up 15.09%, with standout performers including direct holdings in Prudential, Vodafone and Aberdeen Asset Management.
The asset manager’s price has more than doubled over the last three years, while Vodafone’s decision to sell its stake in US mobile network Verizon Wireless back to the parent company has resulted in its share price rising by 25% since July, he said.
However, his 2% allocation to Unilever has hampered performance on the back of weak emerging market growth, and it has fallen by 11% since the summer.
On the flipside, he said, performance was also helped by his allocation to Centrica, which he halved when the stock was nearly 400p.
‘Although Unilever has been a disappointment we back the quality stock, while Centrica has had a sharp descent in prices to 320p from 395p, [following comments from Labour’s Ed Miliband, who said he would freeze energy prices if elected in 2015],’ he added.
Exposure to emerging market debt has been another hindrance to performance, but Kitchenham remains reasonably confident investors ‘overreacted’.
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- Franklin UK Smaller Companies
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