With-profits suffer as unit-linked policies grow across most sectors
With-profits policyholders with Equitable Life have suffered large falls in the value of their investments but those with unit-linked policies saw outperformance in their funds across most sectors, according to David Marchant, head of global funds at Clerical Medical.
The £1.1bn Equitable Managed fund was ranked 14 out of 83 pension funds with a drop in value of 9.5% against a median fall of 11.9% according to Caps figures to 31 December 2001.
The fund was top quartile in each quarter of last year except the fourth and this strong performance continues a long-term trend with the fund occupying a top-quartile ranking over three and five years too.
Many of the institutional funds in different markets performed well too, said Marchant. He pointed out that as well as the managed fund, the Far East, International Growth, North American, Special Sits, High Income and Index Linked funds were all in the first quartile. Marchant puts much of this strong performance down to good strategic asset allocation decisions. He said the fund was aided by a relatively defensive stance over the first half of the year with lower exposure in telecommunications, media and technology stocks. The fund focused on finding higher yielding stocks, though Marchant said that it did not seek to make sector bets.
The fund was underweight in bonds and Marchant said the asset class was likely to underperform against equities for the rest of this year. He sees equities, particularly the stronger markets of Europe, UK and US, as being well placed because of increasing levels of liquidity.
He said that he had been buying into areas which were weak throughout the year, taking advantage of recovery in different areas. Marchant remains bearish on Japan saying that there are still significant risks in the economy. The increasing weighting in equities has seen the cash position fall so that the fund is now light in the asset.
An overweight in property also aided the fund as the asset class performed well through the year, Marchant said.
The funds are now run under the Halifax Investment Fund Management brand within the HBoS group. The changeover took place in February when Halifax acquired the operating assets of the troubled mutual. But Marchant said there had been a large degree of continuity in the way the fund is run. Marchant came over from Equitable and said that a large proportion of his team responsible for different markets retained a role in managing the fund.
Marchant added that there are advantages to being part the HBoS group. 'We have greater resources now and there is a bigger emphasis on teamwork,' he said. 'We are able to make use of a dedicated research function which means that we do not have some of the corporate issues that other fund management houses have when buying in research.'
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