Pavilion Asset Management has launched its UK Growth Oeic along with an ethical portfolio, Pavilion ...
Pavilion Asset Management has launched its UK Growth Oeic along with an ethical portfolio, Pavilion SRI.
The SRI portfolio is being managed by Peter Dale and holds between 50 and 70 stocks, while the UK Growth fund currently holds a portfolio of around 60 stocks and is looking to benefit from recovery situations.
The number of holdings in the UK Growth fund is likely to drop, however, when Pavilion sees economic clarity return.
Pavilion UK Growth, which is managed by Pavilion's chief investment officer Alan Perkins, has around 60% in large caps, 30% in mid caps and 10% in small caps.
Perkins is planning to add more to the mid and small-cap exposure of the fund as he becomes more confident about the market outlook. He believes Pavilion can add more value in this relatively under-researched part of the market compared with large cap stocks.
Perkins said: 'We are looking for recovery situations and there are a number of stocks out there that have let the market down ' such as Invensys. Other recovery stocks we are keen on are Matalan, Go-Ahead and Old Mutual. There is a broad range of sectors where we think there are stocks that have good potential, other examples being BSkyB and Compass. We also like Granada in the media sector.
'We may look to reduce the number of holdings in the fund when we become more confident about the market outlook.
'We are a bit cautious about whether the market is going to go up in the first half or the second half of the year and we have to keep an eye on the US. We may look to reduce the number of holdings to 50 or less if we become more confident. There is very good potential for looking for decent recovery stocks.'
Perkins is keen on some growth companies on reasonable valuations and favours software firm Innovation Group.
Pavilion UK Growth does not have to maintain positions in the largest stocks in the index if Perkins and his UK team do not favour them.
Perkins said: 'The economy is in pretty good shape at the moment although some people think that interest rates will have to rise to around 5.5% for the containment of consumer demand. There is a worry about how much people are spending on credit.'
Pavilion Asset Management, which has £1.6bn in assets under management of which around £500m is in UK equities, was formerly the investment department of Family Assurance.
The group became a wholly-owned subsidiary of Family Assurance in 1997, and was named Pavilion, allowing it to run third-party assets. In September last year stockbrokers Seymour Pierce acquired a 75% stake in the group with Family Assurance retaining 25%.
Pavilion has continued as the appointed investment adviser to Family's unit trust and pension fund range.
Pavilion UK Growth is based on Family Asset Trust which Perkins also manages, focusing on FTSE 350 stocks and looking for companies with above average earnings growth.
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