Mark Wharrier overhauls holdings

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Mark Wharrier overhauls holdings

Mark Wharrier has undertaken a far-reaching overhaul of the £51m BlackRock Income and Growth investment trust by switching roughly 60 per cent of its holdings.

The manager said his main decision was to change the trust’s barbell approach to investing, which tried to balance riskier assets against more defensive ones, in favour of targeting a higher level of market-sensitive stocks.

An example of this is Mr Wharrier’s approach to financials. At the start of this year he said the trust had just 5 per cent of its portfolio in banks. This weighting has now increased to 12 per cent and may go even higher.

“The problem for banks is people are looking in the rear-view mirror and using that to analyse the sector,” he said.

“Everything that had gone wrong for banks did, but once you delve deeper you see that some of the underlying data is quite strong. They are a good investment and the caution will erode over time.”

Mr Wharrier said he had bought Lloyds Banking Group and Barclays, as well as increased his weighting to HSBC.

At the end of February, Lloyds confirmed it would resume paying a dividend for the first time since the financial crisis. Following the announcement, the bank’s share price has risen from 79p to 88p last week.

Other changes made by the manager were more structural, such as the approach used by the trust to buy and sell holdings.

“The trust needed a bit of TLC,” he said.

“The buy-and-sell discipline needed to be improved. It’s important to realise when it is right to get out of stocks.

“The portfolio is a lot more concentrated now, meaning we hold between 35 and 45 holdings.”

The manager has also reduced the trust’s weighting to what is often referred to as ‘bond proxies’ because of the dependability of their dividends. Mr Wharrier said he had cut exposure to Vodafone and consumer goods company Reckitt Benckiser.

Mr Wharrier was installed as co-manager on the trust to work with Adam Avigdori in September 2013 following a period of lacklustre performance.

He had been hired by BlackRock from NewSmith in August that year to work on the group’s UK Income fund, however his responsibilities have since widened.

In the five years prior to Mr Wharrier’s appointment on the trust, its 31.8 per cent share price total return lagged the FTSE All-Share index’s 66.2 per cent return, as well as the average 79.2 per cent gain by the trust’s peer group, according to data from FE Analytics.

Since Mr Wharrier has been on the trust, its 22.5 per cent return is well above the 12 per cent rise in the FTSE All-Share index and 10.9 per cent average return from peers.