View more on these topics

Kames looks to sidestep Brexit uncertainties and equity ‘extremes’

Kames’ Vincent McEntegart may have cut UK assets from his fund because of Brexit uncertainties, but the outlook is not enough to make him bearish on UK stocks.

McEntegart, who has been managing the Kames Diversified Monthly Income fund since launch in 2014, has trimmed UK exposure while preferring the outlook on credit and real estate.

But at the same time, he does not think the UK market will struggle too much during Brexit.

McEntegart says: “We have fewer UK assets although we are not bearish. We have a bit less than we would have if not for the uncertainties of Brexit.

“In the meantime we have a weaker currency so at the moment we are in a temporary sweetspot.”

The way forward for the fund manager is to proceed with caution.

He says the £300m fund has a preference towards credit and real estate markets which performed strongly at the beginning of the year despite a more recent appreciation.

Equities make around 26 per cent of the fund but the manager has trimmed that exposure and upped the credit side of the portfolio, which includes corporate and bank credit, investment grade and high yield.

McEntegart says: “Three years ago we had 40 per cent in equities, but we have reduced it. We also have around 32 per cent in credit.

“Bonds are very different to equities and that makes them a great
diversifier. We don’t want to have the extreme ups and downs of equities.”

McEntegart’s fund has no geographical preference, but the fund manager says he avoids Asia “for the nature of their credit markets” for corporates and uses emerging market debt to access Asia instead.

He says: “You get less yield in credit markets than twelve months ago and that makes them expensive but we think we can pick our way through.”

In February the Kames fund reached its three-year anniversary.

To date, it has outperformed the IA Mixed Investments 20-60 per cent Shares sector returning 28.8 per cent over the three years, while the benchmark saw returns of 20 per cent, according to FE data.

McEntegart says: “When I joined Kames in 2013 the fund didn’t exist but the idea to have it was there and the firm was looking at how to build it.”

The fund invests in a mix of equities, bonds and real estate and has 219 holdings in total.

McEntegart says: “This is a global multi-asset fund and that’s very helpful for our objectives. Our big macro view is that when we look at the world we see a different environment after the financial crisis. There is still a lot of debt and that limits the ability of economies to grow.”

The fund has been picking equities mostly by looking for companies which could keep growing their dividends over time.

For this reason McEntegart does not own Apple, but prefers “steady” firms with a more stable movement in their share price.

The fund also has a 19.5 per cent invested in listed global commercial property names to keep healthier liquidity levels.

McEntegart owns 4 per cent in real estate investment trusts, with a preference for Singapore.

He says: “Singapore is a small but significant economy. It makes a huge part of global trade because of its proximity to China, but it’s not China.

“Inevitably this is going to be an influence to the success of its economy.”

While McEntegart is not too worried about US president Donald Trump for the future of the stocks and bonds he owns, he is aware markets do not always carry on bringing strong returns over the short term.

He says: “As investors, when you have short-term strong returns you expect something to go wrong. We are not bearish but just proceeding with caution. We still think bonds and real estate are good investments.

“Market levels are all quite high and that is a concern but not so much we will sell everything and just stay in cash.”


Finalytiq: Asset management is ‘overpaid, over-supplied and under-delivering’

Having the ability to think and speak freely is important to Finalytiq director Abraham Okusanya. It is one of the reasons he founded the firm in 2011. Love or loathe his direct style of self-expression, Okusanya has no qualms about ruffling a few industry feathers. If some people take umbrage when he speaks the truth […]


Standard Life employee loses complaint over pension transfer value

A Standard Life employee has had a complaint that the provider mishandled his requests for cash equivalent transfer values rejected by The Pensions Ombudsman. The complainant, referred to as Mr T, was a deferred member of the Standard Life Staff Pension Scheme. In March 2016, he requested a CETV for his pension rights, and was […]


John Lawson: Why we need multiple pension dashboards

The UK’s pension dashboard is progressing nicely. Seventeen providers and technology firms are on board, the Treasury and the Association of British Insurers are supporting, and a prototype has already been delivered. That said, a complete working dashboard is still some way off. It is unlikely any of us will be able to log in […]

'Feeling the Squeeze'

Royal London carried out a UK wide survey with 2,500 consumers age 35-44 over the summer. The survey found that over a third, 34 per cent, said their finances felt Squeezed and so were struggling to meet day-to-day expenses, despite 87 per cent being aware that they need to save more. However, the survey did […]

UK housebuilders remain a value trap – despite post-Brexit falls

Despite the sharp drop in housebuilders following the Brexit result, valuations in the highly illiquid market are still at elevated levels. And whilst some investors may take comfort from superficially low price/earnings multiples, are earnings sustainable over the long term, asks Holly Cassell, Assistant Manager of the Neptune UK Mid Cap Fund. Click here to […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment