bob morris' belief in a medium-term economic recovery leads him to take an aggressive position with his HSBC fund
Tim Russell and Bob Morris are both cautiously optimistic of market recovery on a 12-month view but are taking divergent sector positions in the short-term.
Morris' HSBC UK Growth & Income fund is currently more aggressively positioned than his former colleague's Cazenove UK Growth & Income counterpart. This reflects Morris' stronger belief in an economic recovery in the medium-term and desire to position the fund accordingly.
Russell, in contrast, is also cautiously optimistic on a 12-month view, but took profits from the earlier cyclical rally and moved to a more defensive stance ahead of what he feels will be a challenging few months for earnings.
The Cazenove and HSBC portfolios are both overweight financials across the board but their differing shorter-term strategies are reflected in their contrary views on cyclicals and cash.
Ben Yearsley, investment manager at Hargreaves Lansdown, said cash management has played a significant role in Russell's outperformance of Morris in the six months from 1 January-1 July. 'Russell had an advantage over Morris in his fund's initial month due to all of the cash he had. Because of this, he was almost bound to outperform the market and the sector as the market was falling almost continually throughout the first quarter,' Yearsley said.
Robert Burdett, fund of funds manager at Credit Suisse, agreed, noting there is little difference in the two managers' performance records if taken from February or March rather than January.
Indeed while Russell outperformed Morris by 4.25% in the six months from 1 January and 1 July, if the start date of this comparison is taken from 1 February, the difference is only 0.99%. Between 1 February and 1 July, Russell returned 21.47% compared to Morris' 20.48% and the sector's 18.26% return.
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