Mid Wynd International’s new management team has slashed the portfolio’s number of holdings by almost half and significantly cut its UK exposure in an attempt to de-risk the investment trust.
The Artemis Global Select fund management team, comprised of Simon Edelsten, Alex Illingworth and Rosanna Burcheri, took over the fund from Baillie Gifford on May 1 this year following the retirement of its former manager Michael MacPhee, who had run the portfolio for 15 years.
Since then the £67m fund has seen its holdings drop from more than 100 to just 60, while its allocation to British equities now stands at 10 per cent, half what it had been just three months ago.
Previously, the FTSE 250-listed venture capital firm IP Group had made up 8 per cent of the fun. This has since been reduced to 1.25 per cent.
Co-manager Simon Edelsten said: “We are trying to make a conservative core holding that taps good long-term global growth opportunities aimed at investors with a long-term investment horizon.”
Mr Edelsten explained that he and his colleagues had pared back “high-growth stocks that were not making a profit”.
As a result, the team has cut its exposure to such holdings by 10-15 per cent and reinvested the cash in “strong businesses”. Overall just 10 of the stocks they inherited remain.
Mr Edelsten said: “We felt that side of the fund was quite large. We are five years into a bull market and we wanted to be in more sensible, predictable companies.
“The previous management for example held Twitter, which could be enormously successful in five to seven years’ time but no one knows when it will be able to return some cash to its shareholders.”
In contrast the manager highlighted Google, currently the trust’s biggest holding at 2.5 per cent. “The business is making good profits and has good cashflow so as a result it is much easier to value, in comparison to Twitter,” he said.
“If you are buying big solid stocks, for example Singapore Telecommunications, you are not going to double your money but you have a good chance of making 10-15 per cent per annum,” he added.
“We have looked to redress that balance in the fund, to make it more secure.”
In spite of valuation concerns, the US market, which has been hitting all-time highs this year, represents a sizeable 38 per cent of the trust’s assets. Mr Edelsten said: “America is a huge market and fortunately its economy is cracking away at a decent pace.”
In putting its own stamp on the fund, the managers bought four “very successful” American oil fracking companies, including Concho Resources, one of the biggest operators in the Permian Basin of southeast New Mexico and West Texas.
Since the passing of the baton, Mid Wynd International has achieved a share price total return of 2 per cent, just behind the FTSE All-World’s 2.6 per cent but ahead of the AIC Global peer group average of 1 per cent, according to data from FE Analytics.
