By Leo Bland Norwich Union's UK Growth fund has halved its technology exposure since the end of Febr...
By Leo Bland
Norwich Union's UK Growth fund has halved its technology exposure since the end of February as part of a shift into old economy stocks.
During March the fund rose some 1.57% on an offer to bid basis according to Micropal, placing it 77 out of 280 in the All Companies sector. The average return for the peer group was -0.86%.
David Lis, who runs the portfolio, cut the technology holding to 15% from 30% over valuation concerns, selling out of Scoot.com and reducing overall stock bets in the likes of Affinity Internet and Imagination Technology.
Lis said: "My single biggest overweight position now is Boots, which makes up 2% of the fund. The group has launched an internet strategy and has set up a business to business internet operation for dealings with suppliers and the system it is using has been designed by IBM specifically for Boots.
"Also, Boots as a brand has not been tarnished. The group is introducing developments such as in-store dentistry operations, in-store which should work as people trust the Boots name. There is good cashflow coming into the fund and we have select holdings in the old economy."
He also holds stocks such as Bass, where valuations have become extremely cheap following the markets focus on new economy growth stocks. Lis added: "The ratings for this type of stock were down to single figure P/Es and life is not as bad as that for the brewers. The way people are spending their money is changing but not changing so much that brewers will start losing money." Lis remains a believer in the technological revolution and that the internet will transform business models. As such he maintains an internet focus in the portfolio. Technology stocks he holds include Baltimore and Keywill Systems as well as software company Autonomy.
Norwich UK Growth has a focus on emerging growth and mid-cap stocks and its holdings range between 15% to 25% in emerging technology and small cap growth stocks as well as 70% to 80% in large and mid-cap growth stocks.
Lis is running around 85 stocks as he is cautious about taking stock specific risk in the current volatile environment. Norwich UK Growth is ranked fourth out of 224 funds in the UK All Companies sector over three years on growth of 154.4%, offer to bid net income reinvested. It is fourth out of 257 over one year on growth of 93.7%. £144m in size.
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