Artemis backs gold against falling dollar

Artemis fund of funds manager Aidan Kearney says high-yield bonds are currently a risky asset. And he believes the “next big call” will be in fixed interest.
Kearney says: “With yields so low, there is a lot of risk in bonds.” On the equity markets, he says most opportunities are to be found in mid and small-sized stocks.
However, Kearney, although involved in the top-down running of his portfolios, says it is important to leave fund managers to make their own choices. His macroeconomic views are currently reflected in holdings in the Portfolio Growth fund of funds, which is used as part of the Artemis Premier Funds service.
The manager’s view on the dollar is reflected in his decision to own gold. Kearney, who is bearish on the currency, holds a Merrill Lynch gold fund in the Portfolio Balanced fund of funds. He says: “We bought gold about April or May last year on the basis that if the dollar falls, gold will go up. There is no question for us that the dollar will continue to fall.”
He has also taken a strong view on the American insurance market by buying into a Hiscox Investment Management fund that invests in this area. Discussing the choice of individual funds within Portfolio Growth, Kearney says his holding in the Odey Japan fund will perform well irrespective of whether equity markets in the country rise or fall.
He says “If Japan falls, the fund is likely to be protected on the downside. If the country takes off, the manager will cherry-pick some very nice stocks.” Kearney, who describes his approach as “quite concentrated”, is currently holding 15 funds in Portfolio Growth. The portfolio is internationally invested.
Kearney invests in the Asian region through the BDT Invest Asian Focus fund. He says this fund is run in a similar way to Cazenove European, one of his two holdings in Europe: “Like the Cazenove fund, it is return-driven, managed by three guys out of a basement. Its performance last year was generated with 30% of the fund in cash, so it is all about the stockpicking.”
Kearney, director of Artemis Premier Funds, which offers investors a choice of five different investment strategies, spends most of his time picking funds. He says: “We spend 80% of our time on fund selection, identifying the 20% of funds that generate most of the returns.”