Artemis UK Special Situations manager Derek Stuart has increased the proportion of large-cap stocks ...
Artemis UK Special Situations manager Derek Stuart has increased the proportion of large-cap stocks in his portfolio following his fund's poor performance in the wake of 11 September.
At present, he has 47%-50% of the portfolio invested in large caps, compared with an average of around 40% prior to the terrorist attacks, 40% in mid-caps and 20% in small-caps.
Stuart said his fund had been overweight in mid and small-cap stocks on 11 September and had suffered from a subsequent lack of liquidity, although he feels the market is slowly returning to a more normal trading environment and the fund is once again performing well. He said: 'The fund's mandate means we are looking for undervalued stocks. Prior to 11 September we weren't able to see a great deal of value in the FTSE 100. Everything changed on 11 September and we've taken a bit of a caning over the past six weeks. When the bounce came, it took place in FTSE 100 stocks and because we're active managers and don't hug the benchmark, we missed out a little bit on that.'
According to Stuart, the move towards a greater large-cap bias was a temporary change made for liquidity reasons rather than signifying the fund's style had changed. He conceded that the portfolio's recent underperformance was down to Artemis' active management style but said it was a style that had paid dividends over the past three to four years.
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