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Whitechurch ups property exposure in line with UK recovery

Whitechurch Securities is using property and absolute return funds to diversify its high equity weightings so it can steer clear of sovereign bonds

Whitechurch Securities has boosted property exposure in its Prestige model portfolios as the economic recovery gathers pace.

Managing director Gavin Haynes says the firm this month upped its property exposure from 10 per cent to 15 per cent, with 5 per cent in Threadneedle UK Property

The fund, run by Don Jordison, steers clear of London and blue-chip buildings and instead looks for bargains outside the City. Jordison has previously said the sector’s “dragging anchors” have gone and he expects this year to better the 10.5 per cent return seen in 2013.

Jordison’s approach to property is that investment in the sector is about income rather than capital gains. He believes the trick is buying income at a decent price, which is hard in the high-value prime London market.

Haynes says the new holding in the £607.2m Threadneedle fund will offer a chance to make money from the riskier “secondary market” of commercial property. The fund has grown 35 per cent so far this year. 

“It is definitely a play on the improving GDP and economic picture in the UK,” Haynes says. “We have held commercial property for some time. For the past two years, we have favoured the more conservative property funds with a focus on prime property as we see them as a proxy for holding Government bonds.”

The Prestige portfolios have no exposure to Government bonds.

Following the strong run for equities in the past year, Whitechurch decided to trim some of that exposure and move it into property. The move saw the allocation to the £894.2m Odey Absolute Return fund cut by 2 per cent.

For the balanced income and growth portfolio, over a quarter of the holdings are in fixed income. The bond funds Whitechurch uses focus on credit risk, particularly short-duration and high-yield strategies. Meanwhile, the balanced capital growth model has just 13 per cent in fixed income and 34 per cent in alternative absolute return funds.

Whitechurch has also turned to infrastructure in a bid to find income. 

The £900.2m First State Global Listed Infrastructure fund has for a long time been a cornerstone of the portfolio’s global equity holdings. The US-focused fund has recently been cut by 3 percentage points to 4 per cent to bring on board the Lazard Global Listed Infrastructure fund, which operates in Europe.

Whitechurch prefers listed infrastructure funds over more directly invested investment trusts, Haynes says. “Infrastructure has had increasing amounts of attention and looking at investment trusts we do not think there is a lot of value in them, particularly as some are on significant premiums.” 

The company has also replaced the £8.7bn M&G Global Dividend fund with the £793.7m Artemis Global Income fund as part of its global equity exposure. Haynes says the Artemis unit trust, run by Jacob de Tusch-Lec, has been on Whitechurch’s radar for some time. In the four years since launch, it has outstripped the IMA Global equity sector on performance over one and three years. 

The Artemis fund is heavily weighted to Europe and now makes up 6 per cent of the portfolio.

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About Whitechurch Securities

Bristol-based discretionary manager and advisory firm Whitechurch Securities has a five-strong investment committee led by chairman Kean Seager.

The firm keeps the bulk of portfolios in long-term holdings while moving the rest into tactical plays as economic cycles develop. Using behavioural finance to inform investment decisions usually skews portfolios towards contrarian positions.

Seager is joined on the investment committee by Gavin Haynes, Ben Willis, Jonathan Moyes and Amanda Tovey.

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