Old Mutual increases capacity of UK Specialist Equity Fund
Old Mutual Asset Managers (UK) (OMAM) has placed additional capacity in the Old Mutual UK Specialist Equity Fund with new and existing investors.
The additional investment amounted to approximately GBP 10 million, increasing the fund's size to GBP58 million, and the fund has again closed.
The fund is managed by OMAM's UK mid and small cap team, led by Ashton Bradbury, and has a very strong performance record. For the period to 30 September 2004, the sterling NAV has risen by 7.6% year to date and by 19.5% since launch in March 2003. This has been achieved with an annualised volatility of 2.9% and a Sharpe ratio of 2.7.
Ashton Bradbury manages the fund using a business cycle investment approach. He looks to take long positions in companies that can grow faster than the market average over long periods, which are capable of delivering positive earnings surprises or which offer the possibility of a re-rating; short positions need to display inverse characteristics.
Bradbury said: "Our current strategy is to remain long some of the later cycle sectors which should enjoy good trading conditions into 2005, such as commercial real estate, which is benefiting from a recovery in tenant demand. We also have long positions in sectors such as media, support services and construction. Against this we have short positions in companies which are either expensively rated and assume demanding rates of growth going forward, or which we expect to encounter more difficult trading conditions over the next few months. At a sector level we are net short food manufacturers, transport and insurance.
He added: "We expect economic growth to slow in 2005 and although UK interest rate expectations are being reined back, we expect that US rates have further to rise, which may constrain sentiment. We are therefore currently running a broadly neutral net position."
Charles Bathurst, Head of Hedge Fund Distribution at Old Mutual, said: "We are obviously delighted with the rapid take-up of the additional capacity. Whilst we appreciate that there is strong additional demand, it is important to manage growth carefully and to focus on maintaining performance for existing clients."
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