Artemis UK growth fund will have an equal split between large, mid and small-cap stocks
Adrian Paterson has refocused his Artemis UK Growth fund, giving it an equal split between large, mid and small-cap stocks. The portfolio was previously 50% invested in blue chips.
Paterson joined Artemis at the start of September 2002, replacing Mark Tyndall as lead manager on the fund.
Tyndall now heads up the former ABN Amro UK Growth fund, which will be renamed Artemis Capital and become more large-cap-oriented when the group changes to a single administration system at the end of the month.
Tyndall's fund will keep 50%-80% of assets in UK large caps and no more than 10% in small caps. Patterson said it is unlikely his fund will ever be more than 50% invested in the FTSE 100.
It is currently running with an average of 60 holdings, which he believes is fairly concentrated as in some cases he is investing in stocks with market caps of less than £100m.
This, he added, imposes discipline on his style of management because if he wants to buy a stock, he has sell another, so the new holding has to be better than something he already owns.
Paterson predicts the market will remain flat during the course of the year. He said: 'In these conditions, I should be able to go out and find good companies that have been overlooked by the market and are therefore undervalued. To find these, I see as many companies as possible, aiming for around five to 10 a week.'
Valuation is an important part of Paterson's process but he believes if the long-term management and business are good enough, the company is usually worth buying.
He said: 'In this environment, I can hardly remember so many shares in the mid and small-cap arenas on such low valuations with such good prospects.
'There are many companies on low single-digit multiples that used to trade on P/Es of 20 times plus.'
The most aggressive position Paterson has taken in the portfolio is the Lloyd's insurance market, in which 11% of the fund is curently invested.
Since the merger of ABN Amro and Artemis in August last year, the two businesses have been run in tandem, with two third-party administrators: ABN's Bank of New York and Artemis' administrator Cogent.
At the end of the month, the combined business will begin using just the Bank of New York. At this time, all former ABN-branded funds will be renamed with the Artemis prefix.
The group is also holding unitholder meetings on 23 January to consolidate its fund range. It is seeking approval to merge the ABN Amro Equity Income fund into Artemis Income, ABN Amro Select Opportunities into Artemis Special Situations and ABN Amro Pan European into Artemis European.
If these proposals are passed, the group hopes to make the official mergers on 20 February.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till