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View the article online at http://citywire.co.uk/wealth-manager/article/a737915

Performance review: why VWM Wealth’s Thomson is buying UK small caps

by Elsa Buchanan on Mar 13, 2014 at 12:39

‘We’re giving Japan serious consideration again, as I think Abenomics could work and there could be a lot of money to be made, but at the moment I’m not a great fan,’ he added.

Instead, he has favoured Ignis European Smaller Companies , run by AA-rated Ian Ormiston, and AA-rated Chris Garsten’s GMP Senhouse European Focus fund.

Thomson uses a number of passive funds to capture growth in the US with an 8.5% allocation to the HSBC American Index fund, and a 7.5% holding in the Fidelity MoneyBuilder US Index .

In more defensive portfolios, Thomson has taken profits from ‘UK larger caps funds’ and the Vanguard Corporate Bond tracker, rotating into Standard Life UK Property .

In fixed income, to which he has a 21.5% allocation, he favours the ‘adventurous’ Baillie Gifford High Yield Bond fund, run by + rated Robert Baltzer and Donald Phillips.

Over the last 12 months, the VWM Balanced model has returned 12.08%, outperforming the IMA Mixed Investment benchmark, which rose 7.87%.

Thomson warned the FTSE could remain ‘flat until at least the summer’. However, he anticipated the index could reach 7,300 before year-end, with returns averaging 10%.

Buy: UK physical property

The late economic cycle investment provides good income stream, and is relatively stable

Sell: the Far East

I’ve sold over concerns about China’s slowdown. Fortunes of both emerging markets and commodities are tied to it.

Hold: Smaller companies

They’ve had a good run and there is still some more to go for, as economic conditions continue to improve

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