The Dresdner RCM North American Trust is skewed toward health, telecoms and technology, emphasising ...
The Dresdner RCM North American Trust is skewed toward health, telecoms and technology, emphasising biotech and "internet enablers" within these sectors.
Some 66% of the £99m portfolio is invested in these three parts of the market.
This consists of 37% in technology and 7% in pure telecom companies, which together represent slightly overweight positions, and 16% in healthcare, which is heavily overweight against the S&P 500 benchmark.
Seth Reicher, manager of the unit trust, said when investing the portfolio he looks for beneficiaries of particular sector trends, and cited the example of picks and shovel manufacturers being the ultimate beneficiaries of the gold rush.
Within healthcare, 7% of the fund is invested in biotechs and genomics, compared to 1% in the S&P 500.
Reicher said these two areas should benefit as the broader healthcare sector will depend on their developments for future drugs. Within the sector, his key holdings are PE Biosystems and Amgen.
Reicher is looking to increase exposure to the biotech stocks but only once they become cheaper.
He is closely watching Human Genome Sciences and Millennium Pharmaceuticals.
Within the technology element of the portfolio there are some pure internet plays, such as America Online and Yahoo!, although on the whole Reicher is favouring what he termed "internet enablers" - stocks which allow the internet to happen but do not rely on the individual success of particular businesses.
Examples here are Cisco, the fund's largest holding, and JDS Uniphase, also one of Reicher's key stocks.
By contrast Reicher is underweight in financial companies, holding 8% versus the 13% index weighting. He said: "Companies within this sector often do not have the ability to control their growth over the long-term basis.
"Combine that with a rising interest rate environment and the outlook for these stocks from a top down view is not attractive.
"We are stock pickers first and our holdings represent companies that are attractive and we want to own, irrespective of the macro view.
"These include high quality stocks in the financial sector such as American International Group and Citigroup, which are major beneficiaries of recovery overseas."
The fund was launched in 1972 and currently contains 69 stocks in total. The top 10 represent 36.5% of the fund. These are Cisco at 6.4%, Microsoft at 4.6%, Tyco International at 4.4% and EMC Corp at 3.9%.
Others are General Electric at 3.8%, Motorola at 3.1%, Amgen at 2.9%, JDS Uniphase at 2.5% and PE Biosystems at Intel, each at 2.5%. To control volatility, the fund runs a tracking error of 4%, Reicher said. The frAA fund is ranked eighth out of 80 funds over three years in the North America sector on an offer to bid basis with net income reinvested; it is 29th out of 85 funds over one year and, on a bid to bid basis, is 23rd of 88 over three months.
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