Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a637500
Why David Coombs is selling Woodford
by Danielle Levy on Nov 27, 2012 at 14:45
The investment manager has introduced two key trades over the past month, which include a switch out of managers favouring defensives into growth strategies.
This includes selling down Woodford’s trust through his Rathbone Multi Asset Total Return fund , having built up the position since through 2009 and 2010, in favour of the Pimco Global Equity Dividend fund. ‘We have been selling Edinburgh Investment trust on a 5%-7% premium, having bought the net asset value on a discount,’ he said.
Coombs, who is Rathbones’ head of research, said the decision had been driven by the view that the pricing of defensive stocks is starting to look overvalued, causing the manager to broaden equity exposure.
‘Within our equity content we are trying to take profits on sectors we feel are starting to look overvalued. The bubble in defensives could continue for 12 months. We are not out completely, but starting to rotate,’ he explained.
Coombs has also reduced exposure to Morgan Stanley Global Brands into the Kiltearn Global Equity fund, which has more of a bias towards cyclicals.
Underpinning the rotation is a shift out of high yield and investment grade bonds into equities, on the back of a more bullish outlook for global growth – although this trade has been hedged by a move into long-dated gilts and index-linkers.
‘We do feel the outlook for growth will be driven by the US and China as we are more positive on both. We think the regime changes will be positive. China has been through a difficult transition and we think there will be more stimulus in the first quarter of next year, perhaps a stimulus package in March.
‘In relation to US growth we are on the optimistic side of the fiscal cliff debate. We think it will come out the right way, but we are looking at gilts as well to hedge that,’ he said.
Coombs bought into long-dated gilts for the first time since June, having previously bought and held gilts between March and June of this year. ‘We are already in profit on that position. My strategy across two of the funds has been increasing equities and long duration bonds as a hedge to manage volatility,’ he explained.
Over the three years to the end of October, he has posted a 14.64% return with the Total Return fund versus a 6.2% return on Libor.
News sponsored by:
Subscribe to Wealth Manager to get the inside track on your rivals' moves
Keep up to date with how your peers are allocating their clients' assets by subscribing to Wealth Manager magazine.
Today's top headlines
More about this:
Look up the funds
Look up the shares
Look up the investment trusts
Look up the fund managers
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.
On the road
J.P. Morgan Elect on investment growth, income and cash. More information on J.P. Morgan investment trusts.
by Dylan Lobo on May 22, 2013 at 08:05