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View the article online at http://citywire.co.uk/wealth-manager/article/a761457

Performance review: Close Bros swaps bonds for equities

by Eleanor Lawrie on Jul 11, 2014 at 11:32

Then in May, sectors favoured by CBAM, such as healthcare and technology, went up ‘across the board’. In Curtin’s view, markets are now ‘fully priced but not excessively expensive,’ after getting ahead of themselves last year.

This suits the firm, which uses a value-driven strategy in its portfolio construction.

‘The market has run up and we believe in value in the long term. If we can buy something on sale that is nothing to do with the case for the stock, we will. Then we use our research to confirm a stock has characteristics – like it is defensive and has a progressive dividend policy,’ Curtin said.

Performance-wise, the CIO’s priority is to achieve good risk-adjusted returns, rather than shooting the lights out.

‘Do not come to Close if you want to be top dog – but we probably won’t be bottom quartile either. We would like to steer our way over the second quartile and if we can do that with lower risk, than that’s even better.’

Over the 12 months to the end of May, the Balanced fund – reflective of a typical medium risk private client portfolio – has returned 6%, compared to 4.6% by the respective IMA sector.

Over the past three years, the same strategy is up 24% versus 20.3% by the IMA sector.

Looking ahead, Curtin thinks the headwinds that circled in the first quarter will diminish, provided companies can back up analysts’ estimates. ‘In the second quarter we have had a pick-up in the US – Yellen is dovish and does not want to raise rate – and Japan has eased the consumption tax,’ she said.

‘We got what we wanted and now we need to see earnings growth come through. We are in this short-term market where we need to see that earnings growth reflect these policies.’

Earnings growth optimism

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