Bestinvest says
This fund is suitable for core UK equity exposure, with the approach keeping returns reasonably close to the index whilst still retaining the possibility of outperformance, particularly when the team judge the market cycle correctly as they did during the 2008 downturn. The process has a considerable track record and, though long-standing manager Tim Russell recently left the company, David Docherty has been in day to day control of the fund for some time and benefits from the backing of a strong European equity team. The fund also pays an above average yield, though expenses are charged to capital.
The fund targets 1.5% p.a. out performance of the FTSE All Share with a low tracking error (2.5%-4.5%) by investing mainly in FTSE 350 companies. The manager pursues a pragmatic approach known as business cycle investing, setting sector and style exposures based on macro-economic views which are determined at Cazenove’s pan European Equity Strategy meeting. Stocks are classified into seven types; Commodity Cyclicals, Consumer Cyclicals, Industrial Cyclicals, Financials/Interest Rate Sensitives, Growth Defensives and Value Defensive. The portfolio is tilted towards stock types the manager believes will benefit in the next stage of the cycle – for instance, defensive stocks during a recession. The process also includes bottom-up analysis, with stocks being screened on both quantative and qualitative bases before being researched in more depth. The importance attached to top-down and bottom-up analysis varies according to the stage in the cycle – "inflection points" in the business cycle are catalysts for portfolio changes.