By James Thorneley Albert Morillo has completed the restructuring of Investec Guinness Flight's Euro...
By James Thorneley
Albert Morillo has completed the restructuring of Investec Guinness Flight's European unit trust, cutting back the holdings from 50 to 35.
Until now the portfolio, previously run by David Potts, has followed the FTSE World Europe ex UK closely and has had exposure to all sectors in the index.
Morillo, who formally took over running the fund last week, said he is not afraid to take bets against the index.
He added: "You should not regard the index as a model, because it is very inefficient. For instance in 1990 it was still regarding Mannesmann as an engineering company and not a telecom company. You need to anticipate the market rather than react to it."
He argued that running a concentrated portfolio helps a manager maintain a clear focus on risk. Morillo is running the fund in conjunction with his colleagues Kenneth Anderson and David Stanistreet.
He said: "What I am looking for is reasons why we should be buying a particular stock or reasons why we should be selling it."
Stock selection is bottom-up driven with emphasis on a company's fundamentals but the overriding determinant is price.
Morillo said he buys and sells stock prices, not companies. In valuation terms he is prepared to pay anything, as long as the fundamentals are there.
He said: "I do not regard myself as a value, growth or momentum manager. You have to deal with the market in which ever direction it takes."
Morillo and his team work for BlackRock, a US fund management boutique, having previously run Scottish Widows' European portfolios. In February Investment Week reported that Investec and BlackRock established a distribution and investment advisory agreement.
Under the terms of the agreement BlackRock has been appointed investment adviser to Investec's core retail European equity funds, one unit trust and two Guernsey-based funds. In return Investec has acquired exclusive rights to promote BlackRock's European investment expertise to retail fund investors in the UK, continental Europe and South Africa.
While at Scottish Widows, Morillo ran its European unit trust. He left in December 1999 with the £561m fund ranked 14 out of 88 over the year to 15 December in the Micropal Europe ex UK peer group. During the period the fund rose by 104.8% on an offer to bid basis, while the average rise was 87.4%. The £9m Investec fund rose by 75% over the same period.
Jamie MacLeod, managing director of Investec Guinness Flight Unit Trust Managers, believes the recruitment of Morillo and his team will raise Investec's UK profile as a retail fund manager.
He said: "There are currently only three or four UK fund management groups which have good reputations at running European equities. By having Albert manage our retail European funds, Investec will now be able to compete with the established European unit trust managers."
Investec hopes to receive £100m in new monies into the European unit trust over the course of the next 12 months.
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