Sarasin and Partners’ Alistair Campbell has focused on diversification and capital preservation in his £100m fund of funds range, recently adding to North American, credit and alternative strategies.
The manager said volatile markets made it difficult to find opportunities in areas that he previously relied on, pushing him to look elsewhere.
In the three multi-asset portfolios – Sarasin Fund of Funds Global Diversified Growth, Global Growth and Global Strategic Growth – Mr Campbell added a 1.5 per cent exposure to the Perella Weinberg Partners North American Equity Long/Short fund as part of the alternative allocations and to take advantage of a potential uptake in US M&A deals.
“With earnings growth pretty slow across the developed world and lots of cash on balance sheets, we’re seeing a lot of deal flow come through in the US and you can see M&A deal spreads quite wide still,” he explained.
Since December, the multi-asset funds also increased allocations to TwentyFour Absolute Return Credit, bringing total exposure to 5 per cent.
The short-dated sterling-denominated investment grade credit strategy aims to deliver cash plus 2.5 per cent. Mr Campbell said he liked the protection that short-dated credit offered.
“It’s not going to shoot the lights out but holding short-dated, investment-grade credit has been pretty nice.
“For example, in January and February we saw credit widen but the fund defended pretty well. You’re getting maybe 80 per cent of the upside of traditional corporate bonds but with 20 per cent of the volatility, so we see that trade as quite attractive at the moment.”
Mr Campbell said he preferred to access income with alternatives, leading him to add 2.5 per cent each to SQN Asset Finance – a secured lending portfolio of assets – and Sequoia Infrastructure Debt, which lends to infrastructure companies with hard assets as collateral.
“These both yield around 7 or 8 per cent which is pretty attractive in today’s environment. There are plenty of funds that offer this level of yield but it’s more the fact that each of them has some decent underlying collateral,” he said.
In Sarasin Fund of Funds Global Equity, Mr Campbell added 5 per cent to Fidelity’s Special Situations fund, appreciating manager Angel Agudo’s defensive strategy.
“When he’s modelling he’ll spend more time modelling what the worst-case scenario is and what his margin of safety is, which we feel works quite well at the moment when valuations look stretched across the board.”
Mr Campbell sold out of positions in Legg Mason Opportunities and GAM North America to fund the transaction.
He also ended exposure to India by selling the Ocean Dial Gateway to India funds. The manager said he felt, although bullish on India in the long term, the equity market had run too hard in the short term.
Since launch in December 2014, the £25m Global Diversified Growth fund has lost 0.4 per cent compared to a 4.6 per cent gain from the IA Mixed Investments 40-85% sector, FE Analytics showed.