The Merrill Lynch Recovery fund is to be renamed the Value unit trust, writes David Griffiths. The...
The Merrill Lynch Recovery fund is to be renamed the Value unit trust, writes David Griffiths.
The group has applied to the FSA for regulatory approval and while this has not been formally given, Merrills expects a decision shortly. Recovery, with assets of £115m, is on its third fund manager in just over a year. Paul Harwood retired in April 2000 and handed it on to Steve Thompson. Thompson has now left the group and the fund has been run by Habib Annous since April this year.
Annous said that although the fund's name was changing, to clarify its objectives, its focus remains unchanged.
He said: 'Our core strategy of trying to buy good companies when they are undervalued in the market is the same as it has been historically. We are not just looking to buy cheap companies.'
Over the past 18 months, the fund has been investing heavily in old economy stocks, although more recently Annous has increased exposure to the telecoms sector, believing these stocks are now undervalued.
'We have found we are overweight in areas such as construction, leisure and general retailers. Six months ago we felt that the area that was the most robust, in what is a very volatile market, was consumer-related companies. They were also valued at quite low levels,' he said.
At the moment he is keen on sectors that are traditionally viewed as being more defensive, such as utilities. He believes the market will remain volatile in the short term.
Annous said: 'Estimates of earnings are falling and will continue to fall as we have seen in the first half of the year. In these conditions, there are some good opportunities to buy at sensible prices. We believe we are well positioned to make money in the long term as we base our stock selection on valuation.'
Over a three-month period up to 27 June 2001, the fund was ranked 75 out of 298 in the UK All Companies sector, bid to bid. Over a one year period to the same date, the fund was ranked 11, and over three years it was ranked 14, in both cases offer to bid.
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards