Threadneedle’s head of UK equities Simon Brazier has moved towards defensive stocks he believes are under-rated.
Brazier, who runs the £1.2bn Threadneedle UK fund, says he expects a number of defensive stocks to re-rate in 2012. He says: “I have been moving into more defensive stocks, like Imperial Tobacco, which I have been buying over the last six months. It is about 1 to 2 per cent of the portfolio.”
This brings his tobacco company exposure to an overweight position relative to the benchmark of 6 per cent, with a holding in British American Tobacco. Brazier has also increased his exposure to GlaxoSmithKline by 0.5 per cent to 4 per cent over the last six months.
He says: “We have not seen investors’ risk aversion come off as of yet and the reason why defensive stocks have not re-rated yet is that there are lots of funds that run concentrated 30-stock portfolios that do not invest in these stocks.”
Evolve Financial Planning director Jason Witcombe says: “If one area of the market is underperforming for a while, then it is a good a sign as any that it may perform better in the future.
“Most investors will buy what is going up and jump on the bandwagon a bit too late, a more robust way of investing is to buy what is down in the dumps.”