T. Bailey is proposing significant changes to the investment remit of its £120m Growth fund.
Following an asset allocation review, the fund’s exposure to the British market will fall to 25% from its current 40% benchmark. Its American exposure will rise from 15% to 25%, and its weighting to emerging markets from 15% to 17.5%.
Elliot Farley, an assistant fund manager, says that the benchmark takes account of geopolitical, economic and market trends, and while the managers can make short-term tactical calls on the fund, it is the benchmark that reflects their long-term outlook for the global economy.
Richard Martin, the group’s chief investment officer, says the increased American exposure reflects the managers’ conviction that the country will be first out of the economic downturn, buoyed by the strength of the dollar and a resilient private sector.
Meanwhile Britain is suffering from high levels of government and individual debt, weak balance of payments and over-dependence on the financial sector for growth, he says. Although the British market remains important, it is sensible to reduce exposure to it within a global portfolio, Martin adds.
The fund’s bullishness on emerging markets such as India and China has helped performance in the past, Martin says. The increased exposure reflects the managers’ view that there will be an ongoing transfer of economic power from emerging markets to their more developed counterparts.
The regulator has approved the changes to the fund but they will go to a shareholder vote on March 30.
A touch of the ‘other’ works wonders