new star manager will have five times as many FTSE 100 companies than in rathbones fund
The New Star Select Opportunities fund will contain about five times as many FTSE 100 companies in its portfolio as Patrick Evershed held in his previous fund, Rathbones Special Situations.
The fund will start its life with 10%-15% in blue chip stocks, compared with just 3% in the Rathbones' portfolio.
'I am nervous about the market and so have put more money into bigger companies than I would normally,' he said.
'Also, the main market has fallen quite a long way and the smaller companies sector, by comparison, has not. My experience is that after a major shake out in FTSE stocks, the smaller companies dribble off over the next three months. I'm just waiting for that to happen.'
Another key difference is that the New Star portfolio will have a thematic emphasis on public expenditure, whereas the Rathbones fund was skewed toward private expenditure.
Evershed said that because personal savings ratios are at a record low, while personal debt is at a record high, he anticipates a squeeze on consumer demand.
'Meanwhile, the Government will be spending a lot more on health, hospitals, schools and prisons. There will be more public expenditure over the next few years so I am weighting the portfolio more toward companies that will benefit from this theme,' he said.
'At Rathbones, my biggest exposure was retail, property companies, house builders and motor distributors.
'That was because I anticipated there would be a big rise in house prices, which would stimulate private consumption. I'm not excluding this theme, but there will be much less emphasis on it.'
The fund is now half invested and has raised £47m, close to its target of £50m. Once it reaches £50m the group plans to stop marketing the product and providing discounts to the initial charge on discourage investment and keep the fund size small.
The largest holding, which accounts for just over 2% of the portfolio is China Mobile, which was also a dominant player in the Rathbones portfolio. Evershed expects there to be strong further growth to come from the mobile phone industry in China.
'I'm positive on China as it is the fastest growing economy in the world. I like to go for the fast growing parts of the economy, for which I think mobile telephony is one,' he said.
The second largest holding is WH Smith, also at about 2%. Evershed expects stronger profits this year. He said profits were affected last year by the 11 September terrorist attacks, as the company has a strong retail presence in airports, both in the UK and the US, and was hit by the lower level of travelling.
Another key holding is BSkyB, also representing about 2%. Evershed anticipates strong growth on the back of developments in the television industry making Sky television more affordable, which should lead to greater demand.
Meanwhile, GlaxoSmithkline has caught Evershed's eye, after the share price came under pressure recently. However, he did not hold this company while at Rathbones.
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