Miton’s Moore adds US biotech to income fund
Mr Moore, who manages the £187m Miton Income fund with Gervais Williams, is upbeat about the prospects for healthcare. He said changing demographics, a lack of correlation to macro events and a benevolent regulatory environment favour the sector.
“We have just under 20 per cent of the fund in healthcare or pharma,” he said. “It’s defensive – someone with asthma doesn’t care about Chinese GDP.”
He added: “In pharma the regulatory background is improving rather than deteriorating. If you have a drug about to go generic and try to tweak it and extend its patent life, the regulator will have no mercy with you.
“But if you have a new treatment for an unmet need, you are getting waved through quicker.”
This rationale underpins Mr Moore’s position in the BB Biotech fund, which makes up 1.5 per cent of his UK equity income fund.
He said: “It gains us exposure to US biotech in a way I would struggle to replicate. I don’t want to take rifle shots about the companies because I’m quite quickly out of my area of expertise.”
Elsewhere, Mr Moore is also hoping to capitalise on several other market trends. He has identified a growing need for cyber security among corporations, an improving consumer outlook, and increasing demand for services related to savings and investments.
Mr Moore believes broadcasters such as ITV could also be boosted by better advertising rates because of the consumer uplift, while pub company and brewer Greene King could benefit from patrons having more disposable income.
Meanwhile, he expects higher demand for retail financial services to suit firms such as St James’s Place.
He said: “The government pension may run out and your company pension isn’t what it used to be. Companies will benefit from those trends. The pension freedoms will also be here for some time.”
But Mr Moore sees other sectors – in particular, the retail world – being caught out by recent developments.
“I don’t like any retailers because the internet is very bad for retail,” he said. “In the short term the sector has done very well since the [UK general] election but a lot of these people don’t know what to do with the internet.”
Referring to troubled camera chain Jessops, which went into administration in early 2013, he said: “I think everything’s going to be ‘Jessoped’ – there are only degrees of how long it takes.”
Mr Moore also warned that other developments – such as the potential introduction of a national living wage – could have mixed effects for retailers such as supermarket giant Tesco.
“The national living wage is a good-news-bad-news consumer story,” he said. “If you are on the minimum wage you have more money. The flipside is there [will] be a reduction in family credits.
“Companies such as Tesco are employers [affected by] the living-wage. I’m trying to avoid these.”
At the end of August the fund had a 23.1 per cent exposure to financials, 17.5 per cent in healthcare and 12.1 per cent in industrials.
Over three years the fund returned 32.7 per cent, according to FE Analytics. The Investment Association UK Equity Income sector returned 35.6 per cent over the same period.
