Architas has ramped up its UK small and mid cap and Asian exposure within its £758m multi-asset active fund range as it moves to riskier assets to profit from the recent market sell-off.
“With the heightened volatility in equity markets at the end of the summer and into the Autumn we began to put some of this cash to work in the Asian and UK smaller company markets,” says Architas senior investment manager Nathan Sweeney.
On the small and mid cap front Sweeney topped up existing holdings, such as the £184m Franklin UK Smaller Companies fund.
Sweeney says: “Richard Bullas, the manager of the Franklin UK Smaller companies fund, is supported by Paul Spencer who is very experienced. We like the fund as Richard is focused on investing in high-quality companies.”
Although Asia, particularly China, has not had “a very encouraging year”, Sweeney says the delay in the potential interest rate rise in the US could bring some relief for equities in the region.
He says: “We believe the potential for a rate rise in the US is dwindling, which could provide some respite for Asian equities and strengthen the outlook for Asian economies. Also valuations look very attractive when compared to other global markets.
“All the intervention by the Chinese central bank should begin to bear fruit and the impact of this will now start to come through in the economic data. As such we have been adding to our positions as we are less bearish than the current market consensus.”
Last week, the People’s Bank of China cut interest rates for the sixth time since November 2014 in an attempt to stimulate economic growth.
To cover the Asian market, Architas has added Andrew Swan’s £60.7m BlackRock Asia Special Situations fund to the range, as he says Swan ”has displayed good stock picking ability, combined with good macro judgement”.
Sweeney started co-managing the multi-asset active range in May alongside existing co-manager and Architas chief investment officer Caspar Rock after previous fund manager Stephanie Carbonneil exited the firm to join Schroders.