Bailey’s Martin adds new global theme to fund
T Bailey’s £162.2m Growth fund manager Richard Martin has added a new global investment theme in a bid to diversify returns.
The move has been made following the group’s triennial strategic asset allocation review, which saw the fund’s strategic geographic weightings also shift.
The UK equity weighting in the fund has been cut to 10 per cent of the portfolio from 25 per cent, while Europe has been reduced from 15 to 10 per cent and Japan from 7.5 to 5 per cent.
The fund can allocate more to areas within permitted tolerance ranges.
The new global investment theme is at roughly 15 per cent at present after Stuart Rhodes’s £2.7bn M&G Global Dividend, Terry Smith’s £372m Fundsmith Equity and Ian Warmerdam and Stuart O’Gorman’s Henderson Global Technology funds were added in April. The Pictet Premium Brands and Pictet Timber funds were also inserted into the portfolio.
However, Mr Martin said the aim was to bring the sector up to 20 per cent. This will be achieved, in part, by using some of the uninvested cash in the fund, which is at approximately 5 per cent. “The question of where to put money in a pure equity fund is one all investors are having to address,” he said.
To reduce his UK weighting the manager said he sold out of the £158.9m Aberdeen UK Equity Income fund completely and had also previously reduced his holding in the £321m Liontrust Special Situations fund run by Anthony Cross and Julian Fosh.
Mr Martin said the fund has always used an approach that is based on an individual economy’s proportion of global GDP, instead of market capitalisation weightings.
“Indices reward highly priced markets and to use that as a way of allocating funds is lunacy,” he said.
“We look at GDP weights and apply a quality check looking at forecast GDP growth, inflation, demographics and corporate governance.”
The manager said Asia and emerging markets made up 48 per cent of global GDP, but represent only 19 per cent of the global market capitalisation. In line with this, the emerging market strategic weight has been increased from 17.5 per cent to 20 per cent.
He said the M&G Investments, Fundsmith and Pictet Premium Brands funds were chosen because they provided exposure to emerging markets largely through western-listed companies “which takes some of the risk out”.
Mr Martin ran the T Bailey Growth fund from its launch in 1999 to 2008 when he retired, but he returned in April 2011 after fund manager and chief investment officer Jason Britton left the group.