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WH Ireland’s Cotton: time to take Lloyds profits but bank on Close
by Elsa Buchanan on Aug 15, 2013 at 09:06
WH Ireland investment manager Lawrence Cotton (pictured) is buying into market dips, shunning defensives and favouring cyclicals and financials.
‘I am buying into reasonably rated companies that are making sensible acquisitions and have solid margins,’ he said.
‘With the markets temporarily just back under 6,600 for the time being, I am expecting a bit of volatility, so I am temporarily parking [in cash] to go back in at a cheaper level,’ he explained.
Still in the process of moving out of his Polar Capital Healthcare fund (in which he is taking profits), Cotton is upping his position in technology through the Polar Capital Technology trust and targeting financials trusts with global exposure.
An average balanced private client portfolio managed by Cotton currently has about 45% in UK equities. Domestically, he favours banks such as Standard Chartered and HSBC, and holds mining companies Anglo American and Glencore Xstrata.
He also holds 2.6% in GlaxoSmithKline, his sole position in pharmaceuticals.
His 22.5% overseas exposure comprises 12% in the US, with a key holding being the Aviva US Equity Income fund; 4% in Europe through the BlackRock European Dynamic fund; 1.5% in Japan via GLG Japan Core Alpha; and 2% in Asia through the Impax Asian Environmental Markets trust. He also has a direct holding in BMW as part of his European exposure.
On the fixed income side, Cotton has not held gilts for more than five years, but is still 17.8% weighted in bonds. He is holds a mixture of individual short-dated corporate bonds as well a spread of fixed income funds. These include the US dollar-denominatediShares Corporate Bond exchange traded fund (ETF) ‘to get some currency exposure’, the Aberdeen Global Government Bond fund, and ‘a couple’ of strategic bond funds.
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