Alan Custis said he has been more inclined to “take profits in mid-caps and reinvest in large-caps” across his portfolios at Lazard Asset Management.
The manager of the £145m Lazard UK Omega and the £78m Lazard Multicap UK Income funds confirmed he had a bias to large-caps relative to his peers.
The Multicap UK Income fund, which can invest across the market cap spectrum, has a 65.5 per cent weighting in large-cap holdings, 15.6 per cent in mid-caps and 7.8 per cent in small-cap companies.
He added the UK Omega portfolio had 77 per cent in FTSE 100 index names.
While he confirmed he was not taking a view in his portfolios ahead of the UK general election on 8 June, Mr Custis believed there was potential for further sterling weakness after the election, which would benefit large-cap stocks.
He revealed he had been adding to his weighting in financials over the past nine months to take the sector to 29.3 per cent in the UK Omega fund, as banks and insurance companies have been beneficiaries of rising bond yields.
But Mr Custis has been “quite concerned on UK domestics” and is not exposed to any UK retailers in his UK Omega portfolio and does not have any exposure to utilities.
The UK manager has bought into some mid-cap companies so far this year though, having taken a position in investment management business Man Group in January in the UK Omega fund.
Mr Custis said the group’s “breadth of business is unappreciated by the market” as he noted the stock was up 33 per cent in the year-to-date.
He confirmed he had bought a couple of other mid-caps since then which were more “turnaround or self-help stories”.
Turning to performance, he said the fund had performed well in 2016 by “not taking bets” on the various political and economic events that marked the year but acknowledged performance of his funds had been “more mixed so far this year”, although he was unsure why.
According to FE Analytics, over the 12 months to 4 May 2017 the UK Omega fund generated a 24.4 per cent return, ahead of the IA UK All Companies sector average of 21.2 per cent and nudging the FTSE All Share’s 23 per cent gain.
Mr Custis observed since January and US President Donald Trump’s inauguration the markets had become more difficult to read and suggested the macro factors at the moment were “overwhelming the bottom-up micro”.
With several elections on the horizon, he commented post the general election in the UK there could be a continuation of the slightly weaker economic outlook.
But a win for Emmanuel Macron when France goes to the polls on 7 May to elect a new president would mean the European economy looks robust and “Europe looks an attractive area to be exposed to”, Mr Custis added.
eleanor.duncan@ft.com
