Schroders’ multi-managers Marcus Brookes and Robin McDonald have replaced Fidelity’s Alex Wright with M&G Investments’ Tom Dobell in their flagship £1.4bn MM Diversity fund.
The managers said they had sold out of the £2.9bn Fidelity Special Situations fund, which Mr Wright took on from colleague Sanjeev Shah at the start of this year, because of their wish to shift from “early-cycle areas” to “some of the more depressed later-cycle sectors”.
The duo said Mr Dobell’s £6.7bn Recovery fund had greater exposure to later-cycle areas, such as mining and commodities.
“With many markets returning to their near-term highs, we have not yet felt compelled to increase exposure at what still looks [to be] relatively full valuations,” the managers said in a recent update.
“We have taken the opportunity [instead] to rotate a number of our equity holdings to ensure we are on the front foot should we get a better opportunity to become more fully invested.”
The managers said the equity portion of their portfolio was now “more balanced” than in recent times, given early-cycle areas that had “driven our returns for the past two years no longer look quite as attractive given their degree of outperformance”.
“However, some of the unloved later-cycle sectors… appear to offer a far more interesting risk-reward trade off at a time where areas of value are less abundantly obvious,” the managers said.
