Last month saw 28 ejections and 17 new additions. Bearish views on British companies which were previously displayed in the April AFI survey translated into a four percentage point reduction in the allocation to domestic equities.
Hilary Coghill, investment director at City Asset Management, cut the Marlborough UK large-cap growth fund from her selection. “We do not like the UK at all,” says Coghill. “If you look at the FTSE, about 40 per cent is in oil and gas, and commodities. I am not calling the top of the market for commodities but if there is a fall-off the FTSE will come off a long way.”
Coghill decided to add BlackRock UK absolute alpha to her Aggressive portfolio, in place of the Marlborough fund. The BlackRock fund received five selections overall in May. However, the most popular fund in the Aggressive AFI, with seven selections, is M&G’s £3.4bn global basics portfolio.
Global basics also forms the biggest weighting in City Asset Management’s Aggressive AFI selection. Coghill points to the fund’s diversified commodities exposure, its consistency of performance and Graham French’s ability in running big amounts of money.
The fund took top spot from Artemis European growth, which has fallen out of favour with the panellists. The £1.6bn Artemis portfolio was chosen by six advisers in November, but that declined to just two last month and contributed to a three percentage point cut in the overall Aggressive European equity allocation.
Despite the panellists’ aversion to the region, two European funds – JP Morgan Europe dynamic (ex UK) and Odey continental European – joined the Aggressive index in May. The selection of Europe dynamic (ex-UK) marked a return to the AFI, after the portfolio was removed last May following the departure of its former manager, Ajay Gambhir.
The reductions in the British and European weightings were used by the panellists to increase the allocations to other international equities, cash, North America and property. Coghill says she prefers cash to bonds and increased her cash weighting from 6 per cent to 9 per cent, by removing her allocation to BlackRock gold & general and upping her exposure to Baillie Gifford cash.