Market ‘set for growth-led rally’

The Artemis manager has spent the past year changing the focus of his fund from investing in companies that make most of their money from overseas earnings towards stocks that are primarily focused on the domestic UK market.

The motivation for the switch was his screening tool, “Market”, which threw up overseas-focused companies as its best results 18 months ago but today 25 of the top 30 stocks on the tool are domestically focused, such as ITV, Lloyds, easyJet and Brewin Dolphin.

He has been buying stocks such as UK housebuilder Galliford Try and retailer Supergroup, which he said was a “bit expensive” but he became convinced of its growing popularity after seeing huge numbers of people wearing the firm’s clothing at a recent football game with his son.

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By contrast, he has sold down his holding in Weir because the capital expenditure from oil & gas and mining stocks is dropping considerably and Mr Steer expects that to impact on Weir’s revenues.

Another stock that has fallen out of favour for Mr Steer is Rolls Royce, which was the second biggest holding in the fund back in August, but has been reduced significantly since then.

Mr Steer said the stockmarket could see a “hiatus” period during Christmas because it had rallied strongly this year, but he expected to see a growth-led recovery in the medium term, in spite of the prospect of a reduction in US quantitative easing.