Martin Currie’s Porter looks to cyclical stocks
Global equity manager moves away from a bearish view but still has some pessimism towards markets.
Martin Currie manager Alan Porter has started adding more economically sensitive or cyclical stocks to his £128.5m Securities Trust of Scotland, but he warned that economic news needed to improve before he could be outright positive.
The manager is adding economically sensitive and “medium-growth” stocks, while reducing his exposure to “slow-growth” stocks.
Among the medium-growth stocks he was looking at were high-quality companies, “with strong balance sheets, with good business franchises, good management, decent growth and some pretty decent valuations”.
The manager said, however, that he was “slightly concerned” about how companies would find growth.
“I am meeting lots of companies and there is not exactly a lot of capital expenditure and there is not particularly a lot of mergers and acquisitions,” he said.
“If you think global growth will be muted for years, as I do, where will companies get growth from?”
For the manager to be more positive, he would need to see better macroeconomic news and more corporate confidence, which can be measured by capital expenditure.
As a result he said he was “neutral on the corporate side of things in the equity market”.
Meanwhile, Mr Porter holds less than his benchmark in utilities and telecoms because, even though they have “attractive” yields, he questioned how sustainable those yields were as well as how much they will grow.
Mr Porter has managed the trust since August 2011 after shareholders voted to change its mandate. From being a UK-only trust, it widened its remit to become a global equity fund, which led to incumbent manager Ross Watson stepping down.
Under Mr Porter’s management, the trust’s shares have delivered a total return of 19.7 per cent, compared to its benchmark, the MSCI World High Dividend Yield index, which returned 8.7 per cent, according to Morningstar.