AXA Sun Life's US equity team has lowered its weightings in consumer cyclicals in favour of financia...
AXA Sun Life's US equity team has lowered its weightings in consumer cyclicals in favour of financials and healthcare stocks as interest rate hikes threaten to hurt consumer spending.
Since the beginning of the year, the group's US team has benefited from increased analyst research on the US sectors following an agreement AXA has signed with New York based Alliance Capital.
The link to Alliance has given the fund management desk, which consists of five London-based fund managers, access to 20 research analysts covering 500 companies with a large cap and growth bias.
Steve Tyson, head of American equities at AXA SLIM, said: "In the past we were doing this research ourselves but now we have a huge resource at our disposal and we can focus more on the construction of the portfolios and working on client objectives.
"It is too early to say if it has affected our performance but we are now more confident in our views on companies. There are stocks that we are participating in now that a year or two ago we wouldn't have.
The team, which looks after AXA Sun Life American Growth, has invested more in technology, adding holdings in Lucent, Dell and telecoms company Motorola. It has also had exposure to semiconductor companies in this sector.
Tyson said: "We have taken slightly larger bets in these areas but have not taken undue risks. The portfolio has become more focused.
Earlier this year the portfolio increased its exposure to consumer cyclicals with holdings in Fox Entertainment, Carnival Cruise Lines and Nike. However, recently it has cut back its weightings in this area following the recent rate rise in the US and the expectation that more are on the way. He said: "We are now looking for stocks that are good value in a slightly more difficult market.
The London-based managers are in constant contact with the New York analysts through the use of conference calls and Alliance Capital's internet site which publishes the group's detailed written research.
Alliance ranks the stocks on a buy-hold-sell basis and the London team constructs the portfolio behind their recommendations.
The American Growth fund, which has £33m in assets under management, over the period 1 February to 9 August on a bid-to-offer basis a £100 investment would have dropped to £99.62 compared with the sector average of £101.84. Over a three-year period the fund is ranked 33 out of 83 in the North America sector with returns of 74.
AXA SLIM is keen to build up its research capability in local markets. Last week Investment Week reported that it was looking to switch the management of its Far East and Japan funds to AXA Investment Management in Hong Kong and Tokyo.
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