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Rathbones takes equity exposure to record high
by David Campbell on Oct 22, 2013 at 12:35
Rathbones’ multi-manager portfolios have dialled equity exposure to the highest weighting in the four-year history of the fund range, group head of fund selection David Coombs said.
Coombs directly manages around £350 million in his portfolios and influences around £8 billion across the business’ collective portfolios, returning 17.21% over three years on his absolute return funds versus a peer average return of 12%.
The largest weighting is to the US, which he believes he will hold on to ‘for years’ to come.
‘People obviously raise questions about valuation, but almost for the entire course of my career the US has been valued at a premium. No one would say that the US is cheap but the market is very broad and deep.’
He has rotated out of broad market beta over the course of the year however, and into funds at the lower end of the market cap scale or with a strong growth bias.
‘We have gone more cyclical, more small cap, and taken passive exposure to zero. The phase of big macro drivers is over and [we have] gone back to micro fundamentals leading the way.’
‘Within our risk budget, we have used up our full allowance to devote it to funds with a large tracking error. You will notice all those managers are actually based in the US. The last few years have all been about Asia-facing mega caps but what we want now is access to the domestic economy and we think these are the managers best placed to exploit that.’
Similarly, on the big step change in forward-looking UK metrics, the company has recently bought heavily into Gervais Williams' Miton Diversified Income for its domestically orientated selection of companies. ‘At the beginning of the year I would not have touched a fund like that – but confidence has begun to sneak back in.’
Coombs described his views on the UK as having an expected ‘three to four-year duration’. Conversely, despite taking his exposure to Japan to just over benchmark in his index-relative funds, he views the country with minimal conviction that fundamental reform can or will be delivered.
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