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Standard Life Investments looks to UK recovery

Standard Life Investments has made the stockpicking skills of its head of UK equities David Cumming available to retail investors for the first time.

The UK equity recovery fund is designed to benefit from a recovery in the share prices of oversold UK stocks when the equity market improves as the economy recovers. It will comprise 40 to 70 stocks, with a focus on big and medium sized companies in sectors that are more sensitive to changes in the economy such as retail, media, travel and financials. The portfolio will be underweight in more defensive sectors including tobacco, utilities and pharmaceuticals.

SLI says the launch of the fund should not be taken as an indication that the UK economy and equity market are set for a sustained recovery. It says last year’s fall in UK equity markets was the worst since 1974 and believes this has created great opportunities in oversold sectors.
Negative perceptions of firms’ prospects and low valuations which are the result of poor business performance can be turned around if there is a catalyst for positive change. This fund stands to benefit when share prices rise to reflect the improved situation.

SLI takes a team approach to investment management but Cumming takes ultimate responsibility for the fund. He joined SLI from Morgan Grenfell Asset Management in 1990 and is well known for running institutional UK equity funds.

Cumming will draw on the investment philosophy that underpins all SLI funds. His team produces a winners list comprising their top 20 buying ideas from the team’sanalysis, which fund managers use to build their
portfolios.

This fund could be timely given that some market commentators are talking about the green shoots of a recovery. However, other commentators question whether this is a bear market rally rather than a sustained recovery. Either way, this fund is likely to be more volatile than general UK equity funds and will appeal to investors with a higher risk appetite.

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