Fidelity’s Nick Peters has outsourced bond picks and increased the focus on manager selection on the fund left by his predecessor Trevor Greetham.
The £650m Multi Asset Strategic fund, which invests predominantly in other Fidelity funds, has upped exposure to Alex Wright’s £2.8bn Special Situations fund from 1 per cent to just over 4 per cent.
The move comes as part of a broader desire by Mr Peters to generate more outperformance by backing fund managers rather than focusing on asset allocation, which was a stance favoured by the fund’s former manager Mr Greetham, who left at the end of January to join rival Royal London Asset Management.
“Historically, most alpha generation was expected to come from tactical asset allocation, which, given Trevor’s background, makes sense,” Mr Peters said. “But we are hoping over time there will be… generation from the manager-selection side as well.”
Mr Peters has also handed over responsibility for bond selection to his fixed income colleagues, who have added a global inflation-linked bond fund to the portfolio in the past few months.
“Trevor used to do the fixed income himself but we have three fixed income experts, so I have devolved responsibility to them,” he said.
“Global linkers are cheap relative to other bond classes and we think there are signs of inflation coming through in the US and UK through wage growth. We think that will be a trend so it seemed sensible to increase exposure.”
Elsewhere, the fund has ended its three-year overweight to the US.
“Over the past four or five months we have reduced US exposure, primarily on concerns over the effects of the strong dollar on corporate earnings, where we have seen downgrades, while US valuations are looking stretched. We took cash off the table and put it in to UK and Japan.”
Spurred on by the weak euro, the manager has moved from underweight to neutral on Europe ex UK equities, and said he was considering moving to an overweight position as the region becomes a buying opportunity.
“I did not move to an overweight because of Greece, which, in hindsight, was a mistake because the market has done very well,” Mr Peters said.
He added that he was “sitting on his hands” last week as he waited for developments on the Greek fiscal situation, but his general view was that it is a “ring-fenced problem” that might actually put off other member states from leaving the eurozone.
