By Jenne Mannion The Duncan Lawrie Smaller Companies fund is heavily overweight in information techn...
By Jenne Mannion
The Duncan Lawrie Smaller Companies fund is heavily overweight in information technology companies
This reflects the confidence of Richard Power, the investment manager, that this sector will continue to be a strong growth area in the UK
Power said that the £6.5m fund had identified these IT-related companies as well positioned to capitalise on the surge in internet usage. The IT sector accounts for 25% of the fund, compared to the FTSE SmallCap index weighting of 6.5
He said: "Smaller companies in these sectors are focusing on delivering niche products and services. Demand for these specialised hardware and software products and computer services will increase in line with the strong growth of internet usage within the UK
The fund's holdings in this sector include Psion, Vocalis Group, Baltimore Technology, Intelligent Environment and Affinity Internet, which is the portfolio's biggest holding, accounting for 2.6% of the fund
He said the expected interest rate increases in the UK would result in some volatility in the sector, however Power is confident in the current growth rates reported in recent results and expects his stocks will ride through the volatility
Within the UK Smaller Companies sector, the Duncan Smaller Companies Fund is ranked fifth out of 74 funds over three months, second of 73 funds over one year and third of 67 funds over three years
Power is also overweight in healthcare stocks, which represent 9% of the portfolio, against a 2% index. This position aims to capitalise on the growing demand for safety and continued efficiencies and cost savings in surgeries and hospitals. Duncan Lawrie is negative on the industrial and manufacturing sectors, saying that strong sterling continued to put downward pressure on margins by affecting international competitiveness
Services account for the biggest slice of the portfolio, with cyclical services accounting for 32% of the fund, while non-cyclical services account for 5%. This is close to neutral with the benchmark, at 33% and 2% respectively
He said: "This allocation is based on a purely bottom up approach to stock selection. The sector is very diverse and there are no general trends within this sector influencing stock selection
Power says the fund, launched five years ago, concentrated mainly on stocks with a market capitalisation of less than £500m.Most of the fund's holdings, between 50 and 60, are quoted on the London Stock Exchange, although about 20% of the holdings are listed on the Alternative Investment Markets (AIM
After Affinity Internet, top holdings, each accounting for 2.5% of the fund are Fibernet Group, Powderject Pharmaceuticals, KS Biomedix, Medical Sol-utions and MITIE Groups. Others are Phytopharm, Baltimore Technology, Hercules Property Services and Medysis, which each account for 2.4% of the fund
Minimum lump sum investment is £1000, with a 5.5% front end charge and 1.5% annual management fee. Commission to IFAs is 3
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