Jeremy Lang has changed almost one-third of the Liontrust First Income fund following his annual rev...
Jeremy Lang has changed almost one-third of the Liontrust First Income fund following his annual review of the portfolio.
Lang focuses on stocks he believes are suffering from an over-reaction in the market, such as where a firm's share price has fallen but its yield has still risen.
A stock comes to Lang's attention when it is yielding 2% over longer-dated gilts. At present these are the ones that are yielding 4.3%, so he looks for companies yielding 6% plus.
Jonathan Harbottle, marketing director at Liontrust, said usually there are less than 10 stocks in the FTSE All-Share yielding this amount, however, since the beginning of 2000, this has risen to in excess of 150.
Of these stocks, more than 100 are yielding about 3% over longer-dated gilts, which Harbottle said is unprecedented.
Lang bought 14 new stocks following his annual portfolio review. Of these, nine yield some 7%, while five are yielding about 3% more than index-linked gilts, ie 5% plus. To make way for these stocks, Lang has sold 13 holdings either because they were not growing their dividend quickly enough or because they no longer yield enough.
At present, 50% of Lang's fund is invested in firms yielding 3% above long-dated gilts, 40% is invested in stocks yielding 2% above index-linked gilts and 10% is in stocks with yields as high as inflation but which have good growth prospects.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress