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Softly, softly approach

Multi-manager Cazenove has broadened the commodity exposure within its diversity fund by reducing its holding in JP Morgan natural resources by 10 per cent to establish a new position in the Schroder agricultural fund.

Cazenove believes there is upside potential in soft commodities and says its views were verified during talks with Invesco Perpetual’s star fund manager Neil Woodford, who believes biofuel demand will push up prices.

The JP Morgan fund does not invest in soft commodities so Cazenove felt it needed to have some exposure to this area.

The Schroder fund is a Luxemburg-domiciled portfolio launched in October 2006 but it did not have UK distributor status at launch, which meant it was not tax efficient for UK investors. The fund recently received distributor status and this was a motivating factor in Cazenove’s decision to invest.

The multi-manager sees diversification within the commodities sector as consistent with its strategy of broad diversification within a range of uncorrelated asset classes.

Cazenove head of multi-manager Mark Harries says says: “The diversity fund has only had two negative months in the last 20 and it was first quartile again in April. We’re not surprised by this consistency. You have to broadly diversify to achieve that because trying to predict the short-term outlook is almost impossible to do.

“Typically, funds in the cautious managed sector are 60 per cent equities and 40 per cent bonds so if bonds do badly we are to a degree shielded from that by exposure to alternatives such as commodities.”

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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.

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