Kypros Charalambous was one of three AFI panellists to eject Lazard UK Alpha from their portfolios as he took his first chance to alter his firm’s selections in the Aggressive index.
Last month’s Adviser Fund Index (AFI) rebalancing once again led to significant changes in the Aggressive index. Out of 124 funds previously selected for the benchmark, 32 were ejected, giving a turnover rate of 26%. This compared with a figure of 19% at the last rebalancing point in May. A total of 22 portfolios were added in November, leading to an overall net loss of 10 funds.
The most previously popular fund to leave the index was Lazard UK Alpha. Three panellists, including Kypros Charalambous, investment manager at Gerrard Investment Management and an associate director of Barclays Wealth, removed the fund from their portfolios. The rebalancing gave Charalambous his first chance to alter Gerrard’s selection since replacing Raj Basra as the firm’s AFI panellist earlier this year.
Charalambous swapped the Lazard portfolio for a 20% weighting to Liontrust First Growth, the maximum allocation allowable under AFI rules. The Liontrust fund has also been added to Gerrard’s Balanced and Cautious selections, on weightings of 18% and 10% respectively.
Outside the AFI, the £400m portfolio is Gerrard’s single largest holding, accounting for about 12% of the firm’s assets under management. “It is the only fund that gives you pure growth,” says Charalambous.
Alongside the Lazard fund, Charalambous also ejected L&G (Barclays) Multi-Manager US Alpha from Gerrard’s Aggressive portfolio. However, he boosted his American exposure by adding new 7% allocations to Axa Framlington American Growth and Prudential North American. Charalambous says the growth tilt of the Axa fund will complement the value bias of the Prudential portfolio. Both funds were new additions to the index.
Gerrard’s weighting to American equities rose by two percentage points as a result of the change. Overall, exposure to North America in the Aggressive AFI grew by one percentage point in November, despite negative panellist views on the region in the August mid-season questionnaire.
Charalambous was less positive on Japan, cutting his exposure by swapping a 6% weighting in Baillie Gifford Japanese for a 5% position in SG Japan CoreAlpha.
However, he raised his Asia Pacific (excluding Japan) allocation by adding Lloyd George Management’s £60m Eastern Opportunities fund, run by Adaline Ko. Charalambous says that the fund works well alongside Aberdeen’s less aggressive £1.3 billion Asia Pacific portfolio, which also features in Gerrard’s selection.
The addition of the fund helped increase the Aggressive AFI’s Asia Pacific weighting by four percentage points, the biggest allocation shift in the rebalancing.
Charalambous reduced Gerrard’s European weighting by removing a 7% allocation to Lazard European Alpha, while increasing his stake in Artemis European Growth by two percentage points, to 9%. Despite the move, the overall index weighting to European equities was unchanged at 15%.
The Artemis fund remains the most popular fund in the Aggressive AFI, after it was chosen six times. First State Asia Pacific Leaders and SG Japan CoreAlpha also received six selections.
The final change to Charalambous’s equity fund line-up was a five percentage point reduction in his allocation to Richard Buxton’s Schroder UK Alpha Plus fund. Away from stocks, Charalambous has removed Gerrard’s fixed income weighting by ejecting Fidelity Moneybuilder Income and Standard Life AAA Income, which invests in government and corporate bonds.
He also introduced a 12% weighting to SVM’s £50m Global Opportunities fund. The multi-asset portfolio had allocations to resources, hedge funds, property and private equity at the end of October.
The overall property weighting in the Aggressive index fell by one percentage point, to 2%, despite the arrival of New Star International Property.
Indeed, the New Star fund was the most popular new addition to the index, receiving two selections alongside Fidelity South East Asia. However, it was more than offset by the ejection of New Star’s £2 billion UK Property unit trust, Schroder Global Property Securities and Standard Life Select Property.
According to data from Financial Express, the most-selected providers in the Aggressive index were M&G, Jupiter, Artemis, BlackRock Merrill Lynch Investment Managers and Invesco Perpetual.
The top five funds were Schroder UK Alpha Plus, First State Asia Pacific Leaders, Artemis European Growth, SG Japan CoreAlpha and Schroder European Alpha Plus.
The best-performing holding since the launch of the AFI is Gartmore China Opportunities. The fund returned over 240% in the three years ending November 1.
The Adviser Fund Index Series – A Summary
The Adviser Fund Index series comprises an Aggressive, Balanced and Cautious index each tracking the performance of portfolio recommendations from a panel of 19 investment advisers. For each risk profile, all panellists specify a weighted portfolio of up to 10 funds from the authorised UK unit trust and Oeic universe that, when aggregated, define the constituents and weightings of the three AFIs (see