stephen whittaker ups new star uk growth's exposure to financials, construction and retail
Stephen Whittaker, the manager charged with turning around poor performance of the New Star UK Growth fund, has spent his first week on the job revamping the portfolio.
Whittaker, who joined New Star last week, expects the portfolio will be fully as he wants it by the end of this week and will closely represent the strong performing UK Growth fund he left behind at Invesco Perpetual.
Whittaker replaced Alan Miller as manager on the New Star fund, which is ranked fourth quartile in its sector since launch. Miller is to concentrate on running hedge funds and his role as chief investment officer.
Both Miller at New Star and Whittaker as manager of the Invesco Perpetual UK Growth fund were underweight in financials.
However, since arriving Whittaker has increased exposure to financials up to a neutral weighting. Although cautious about these stocks when he left Invesco in May, Whittaker said valuations are now compelling. Therefore he has added to Lloyds TSB and introduced Standard Chartered and Northern Rock.
'I am quite optimistic on the market recovery. I expect that financials will provide the early leadership but that will cascade into the consumer and industrial cyclicals,' he said.
Exposure to construction and retail stocks in the New Star portfolio has also been increased. In doing so, Whittaker turned to long time favourites of his Invesco days, namely Barratts, the housebuilder and retail companies WH Smith and Debenhams,.
Areas Whittaker is looking to reduce exposure to include media stocks such as Reuters, Carlton and EMI. Weightings to the oil sector have also been reduced, through selling BP and Shell.
Whittaker and Miller have very different styles.
While Miller tends to be a bottom-up stockpicker with an emphasis on growth, Whittaker looks for attractive valuations within his stockpicking and also employs a top-down overlay.
In terms of general changes the New Star UK Growth fund, under Whittaker's management, will be more diversified. It is likely to hold around 90 stocks, whereas Miller held about 60-70.
The new manager is also aiming to have less of a concentration in the top 10 stocks. Miller held around 30%-40% of the fund in these companies, whereas Whittaker is more likely to hold around 20%-30% of the portfolio in these key stocks.
Whittaker is set to have less of an emphasis on large cap stocks than his predecessor.
At £205m, the New Star fund is much smaller than the £800m Invesco Perpetual fund. Whittaker said the smaller, more nimble portfolio has made it easier to make changes. However, his basic philosophy is to 'buy and hold' so he does not anticipate the smaller size being a major advantage.
Currently, the New Star UK Growth is ranked 278 out of 292 funds since launch on 20 July 2001 to 8 July 2002.
Over that time the fund has fallen by 26.13%, compared to the sector average return of -17.51%, offer to bid, according to figures provided by Standard & Poor's.
The UK Growth fund is New Star's largest fund and has some 25,000 unitholders.
‘Promising lead’ or ‘Back to the lab’?
Have economic cycles fundamentally changed?
Our weekly heads-up for advisers
Two global vehicles
'Further plug advice gap'