The fund is currently sitting in the fourth quartile of the IMA Asia Pacific ex Japan sector in the past six months, with its 9.3 per cent return underperforming the sector average of 12.3 per cent and the return of the MSCI AC Asia Pacific ex Japan index which has risen 12.7 per cent, according to data from FE Analytics.
But the star manager, who has outperformed both the sector and benchmark significantly since the Leaders fund was launched in 2003, said he would not be changing his position.
“Performance has been slightly disappointing in relative terms, but I have been reasonably happy with that given that we are cautiously positioned,” he said.
“The biggest detractor for the fund was not owning Australian banks but we are happy with that position.”
Mr Tulloch said he had a negative view on the Australian dollar, which is one of the reasons why he has moved to an even further underweight position in the country by selling out of Aurizon, a rail transport company formerly owned by the government of Queensland.
The Australian parent company of UK-based First State Investments, Colonial First State, held 4 per cent of Aurizon as of February 14 2013, but Mr Tulloch has sold out both on the negative view of the currency but also due to “changes in the remuneration structure which we did not think reflected well on the culture at the firm”.
The sale of Aurizon has reduced the fund’s weighting in Australia to 17.4 per cent, having been fractionally under 20 per cent at the end of January. It means Australia is still the largest country weighting in the portfolio but is significantly less than the index weighting of 26.7 per cent.
The decline in the Australian exposure has come in spite of the fact that Mr Tulloch has been adding to his holding in Australian gold mining firm Newcrest Mining recently.
He has boosted the Leaders fund’s weighting in Newcrest up to 3.5 per cent because of his outlook on the gold price, which has recovered strongly since dropping by more than 8 per cent in two days last month.
“I added to it because the current gold price looks very attractive now,” said Mr Tulloch. “The reason I own it is as insurance because of the role of gold and as an insurance against the novel experiment of quantitative easing, because no-one knows what the outcome could be.”
