Mark Pignatelli has turned over 70% of the Smith & Williamson (S&W) European Growth Trust and increased exposure to mid caps since taking over the portfolio in early November.
He replaces New Star’s Richard Lewis and Annie Stradling, who ran the fund on an outsourced basis.
S&W recruited Pignatelli, who previously worked at Barings and Schroders, as part of its plans to develop the funds’ business.
Pignatelli has increased the number of stocks from 40 to 62 on the GBP 8m fund. He says: “I do not think the previous managers had tilted the fund in terms of market direction but I think that large caps are at a bigger premium to mid and small caps.
“It is clear people have been flushed out of the mid-cap sector, but this makes it attractive to me and I think it is an area where a fund manager can really make a difference in terms of research and diversity.”
The portfolio has a blend of market-caps across each sector except financials, where Pignatelli is sticking to the larger end of the cap spectrum.
He adds that although he is not calling an end to the bear market, he thinks managers will be rewarded for moving out of comfort zones and into pro-cyclical areas. He says the enormous fiscal stimulus and money printing will make a difference in stabilising stockmarkets.
Despite his optimistic view on mid-caps, Pignatelli says he does not expect momentum to pick up until 2010, but he anticipates a 15% rally in 2009, after which investors will need to return to their negative stances.