M&G’s Stuart Rhodes has been rotating his £7.5bn Global Dividend fund towards growth stocks and cyclical companies as the valuations of some of his core mega-cap holdings have become stretched.
The manager said there was “more value” in cyclical stocks and the companies he classifies as “rapid growth”, meaning most of his purchases this year had been in these areas.
He said: “Quality names have been much more difficult to justify in terms of valuations this year. We have seen a lot of opportunities in other areas which is why the fund has been able to keep up with a rising market.”
In 2013 so far the Global Dividend fund has gained 25.9 per cent, according to FE Analytics, outperforming its benchmark MSCI AC World index which gained 23.1 per cent.
Among the companies Mr Rhodes has brought into the fund are Aberdeen Asset Management, Standard Chartered bank and Asian conglomerate Jardine Matheson, all of which were part of a play on Asia and emerging markets.
“There has been significant underperformance in [emerging markets] across the summer and we’ve been trying to use that to get access to names at decent valuation entry points,” Mr Rhodes said.
“Aberdeen and Standard Chartered were both weak, giving us the ability to buy into them and both are now roughly 2 per cent of the portfolio. We’ve been following Standard Chartered for a long time - it was one of the most expensive investable companies on our list at launch, and its now the cheapest bank we own.”