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Julian Gibbs

Now that the American elections are over and President Bush has been given a strong mandate, with increased majorities in both the Senate and the House of Representatives, the outlook for the world’s stockmarkets looks to be fairly good, with the UK, Japan and the Pacific markets leading the way.

In the UK, I particularly like the Lazard UK alpha fund because it is well run by an excellent team. The aim is to outperform the FTSE All-share index by 2.5 per cent a year over a three- to five-year average. So far, they have achieved this, having beaten the FTAll-share index by 3.4 per cent in 2001, by 7.3 per cent in 2002 and by 3.7 per cent in 2003.

This year is not looking quite as good but the fund is up by 15 per cent, marginally lower than the index at present but still very much in the top quartile. Lazard has achieved this excellent performance by investing in individual securities rather than markets or sectors.

The fund is conser-vatively run, with risk being balanced against reward aiming to max-imise returns in rising markets and minimising the effects when markets fall. Every single stock has to earn its right to be included in the portfolio, with each security upon purchase being given a target price.

At any point, they may sell a security if its price level no longer reflects its value, the underlying investment assumptions are no longer valid, external events occur or a better alternative comes along.

Lazard invests in a concentrated portfolio of 40-50 stocks, mainly large caps but also with some exposure to mid caps and small caps.

The managers always work as a team and avoid the star manager culture. I recommend this fund for all those who are tempted to invest in a tracker fund. This fund is a much better option.


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