Stephen Whittaker has raised the yield on the New Star UK Growth portfolio by a third since taking o...
Stephen Whittaker has raised the yield on the New Star UK Growth portfolio by a third since taking over from previous manager Alan Miller in July.
The 3% yield has risen to 4% at a time when Whittaker has built up mid-cap exposure, cut the underlying P/E of the portfolio, and increased the number of holdings from below 70 to nearer 90.
As part of the changes, oil stocks have been removed from the £170m fund while media stocks have been thinned out. At the same time he has increased exposure to banks, which he believes look cheap after recent market weakness.
Fundamentally, Whittaker believes the UK economy is in good shape with little on the horizon in the medium term that could upset this picture.
Among the areas he sees as attractive are mid-cap consumer and industrial cyclicals. Whittaker said: 'I think that valuations got far too depressed based on overly pessimistic views on the economic outlook.'
Whittaker said he has been fortunate in his timing of taking over the fund due to the fact the market is at a low.
Over one year to 12 August 2002, after charges, the £170m fund has fallen 34.9%, compared to the average return from the UK All Companies sector of -24.8%, ranking it 286 out of 291 funds.
Whittaker identified some stock specific situations in the past as the prime reasons for this underperformance since launch. He said the investment processes he and Miller use are fundamentally similar but some of the conclusions reached on stocks they like have proved to be different.
Two global vehicles
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Will report to Mark Till