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Performance review: why Vestra’s Lakshmanan has slashed equity exposure
by Elsa Buchanan on Jun 09, 2014 at 14:24
Vestra Wealth head of investment solutions Meena Lakshmanan has slashed her equity exposure by 10%, rotating most of this into cash as she looks to lock in profits.
This has reduced the equity weighting in the firm’s mid-risk model portfolio to neutral after being overweight last year.
‘After increasing allocation to equities in 2013, we realised that, if you look at last year’s earnings performance of equity markets, quite a lot has come in the US and Europe – at least on multiple expansion – as opposed to earnings,’ she said. ‘Therefore, we felt that if earnings disappoint even a little bit, the markets would be quite vulnerable to a pullback.’
The bulk of the proceeds, some 7%, has been moved into cash while Lakshmanan eyes other potential opportunities.
She has reduced exposure to European equities, moving to a neutral weighting. Last September, she took a position in the Alken European Opportunities fund, managed by Citywire A-rated Nicolas Walewski. She also owns AA-rated Alister Hibbert’s BlackRock European Dynamic fund and the Comgest Growth Europe fund.
Lakshmanan has also moved more neutral on the US, over what she considers stretched valuations and negligible earnings growth. She holds the Findlay Park American , T Rowe Price Small Cap Stock and Morgan Stanley US Advantage funds.
‘It is a stock-picker’s market, where some stocks have got carried away after rallying in 2013, in particular in biotech and technology, but where we have seen a very sharp reversal from growth to value this year. Against those pretty decent pullbacks, the markets are still up but stock specifics are being driven by big news events,’ she added, highlighting a continuation of share buybacks across the Atlantic.
Emerging market exposure
Lakshmanan believes emerging markets (EM) could provide better opportunities as earnings recover. ‘While consumer staples are very expensive in EM, trading at very high multiples, energy companies or industrials are trading on more attractive price to earnings ratios. If structural reforms are being enacted in the EM, and we don’t see another big “taper tantrum”, we could see signs of a pick-up.’
She highlights AA-rated Jonathan Asante’s First State Global Emerging Markets fund and A-rated Devan Kaloo’s Aberdeen Emerging Markets Equity fund. She also has exposure to Lazard Emerging Markets , managed by A-rated James Donald, and the Somerset Emerging Markets Dividend Growth fund, managed by AA-rated Edward Lam.
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Look up the funds
- Alken Fund - European Opportunities-GB1
- BlackRock European Dynamic A Acc
- Comgest Growth Europe Euro
- Findlay Park American GBP
- T Rowe Price Small-Cap Stock Fund
- Morgan Stanley US Advantage Z USD
- First State Global Emerging Markets A GBP Acc
- Aberdeen Emerging Markets Equity A Acc
- Lazard Emerging Markets Equity
- Somerset Emerging Markets Dividend Growth A Acc
- GLG Japan CoreAlpha Equity I JPY
Look up the fund managers
- Nicolas Walewski
- Alister Hibbert
- Jonathan Asante
- Devan Kaloo
- James Donald
- Edward Lam
- Jeffrey Atherton
- Stephen Harker
- Neil Edwards