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Exeter Investment gauges its exposure to split caps

Exeter Investment Group is reviewing the exposure of its funds to the split-cap sector in response to IFAs&#39 concern over professional indemnity insurance.

The move comes after the group found that PI insurers were asking IFAs who do business with Exeter to advise them of their exposure to splits.

Exeter has decided to limit the short-term exposure to splits of the £70m Exeter capital growth fund.

Historically, the fund has concentrated on the capital shares of splits but over the past five years it has seen that focus decline as fund manager Nick Brind took advantage of what he perceived to be better value in other sectors.

Although Brind does see value in some splits, he has pledged to keep the fund&#39s exposure to the split sector at the current level of a third.

However, the firm says its fund managers are unable to limit the split exposure of its other funds due to individual fund policies and objectives.

Brind says: “We believe that most of the bad news is behind us and that the splits sector will show a pick-up in values as trusts move closer to their wind-up dates and discounts to the asset values inexorably narrow, provided, of course, that their broader equity market sees no further significant falls.”

Simpsons of Brighton IFA partner Andrew Merricks says: “Exeter are in desperate straits. I am not sure what they are hoping to gain by this. The IFA community can choose who they use. It is more of a distress call from Exeter than a measure to help IFAs. They have got themselves into a corner with their dependence on splits in the past.”

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