Range to cover the UK, Europe, Japan, emerging and global equity markets
Scottish Widows Investment Partnership's (Swip) is looking to rationalise its range into core and focused portfolios across all main markets by the end of the year.
While there will be a core and focus portfolio for each market it does not rule out other portfolios for each region as well, such as small cap and special situation-type funds.
Graham Campbell, director of UK equities at Swip, said: 'There may or may not be different managers on each core and focused fund but I will manage both the UK core and focused fund.
'The main markets on which there will be a core and focused fund includes the UK, Europe, Japan, emerging and global equity markets.'
There is currently a wide range of funds at the group from Scottish Widows, Lloyds TSB, Hill Samuel and Abbey Life. He said: 'We only want funds to be there because they are needed and we want to be clear what each fund does. For example we have four UK growth funds, which are currently being managed as one. The range will be structured to have at least a core fund for each main market and one that will be more aggressively managed with around 30-40 stocks in the portfolio.'
In terms of fund management, Swip has already been changing the management of individual portfolios. The group has been working through each fund at a stock level and removing holdings that cannot be justified. Campbell said: 'We are identifying companies we find attractive and looking to see whether the share price is lower than the intrinsic value of the stock. We have gone through each fund to make portfolios very tight across the board.'
Swip has also developed an in-house investment research process, which is designed to free up fund manager time, giving them more time to focus on stock analysis.
He added. 'The process is now more rigorous and covers oil, energy, pharmaceuticals and telecoms.
'We will look at the traditional things like earnings and cashflow, as well as sensitivities that drive particular businesses in the long-term. We are looking at all companies on a five-year view rather than look for short-term returns.'
The £2.3bn Scottish Widows UK Growth retail unit trust has a portfolio of 70 stocks with 97% of assets in large caps.
'This gives an example of how diversified funds are likely to be,' said Campbell. He added that managers had become used to momentum in the market to generate returns and the group's in-house stock analysis was a useful alternative and provided more objective research than that offered by brokers.
Swip started a series of IFA roadshows last week. Campbell said: 'Our message is that we are in a period of change. Many of the staff have changed as has our processes, research and the impact on performance has already been seen.'
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