We embraced the first sunny day of Spring recently to catch up with Sam Buckingham, one of the folks behind Abrdn’s model portfolio service.
After years in which Abrdn has had a strong aversion to actively managed US equity funds, they have made the leap and gone, partly, active with their exposure.
In addition to their long-established holding in the Vanguard US Equity tracker, they have added the T Rowe Price Structured US Research Equity fund: though it should be stressed that they haven’t jumped in head first. 90 per cent of the allocation is to Vanguard and 10 per cent is to the active strategy.
The Vanguard fund is a popular one with the allocators we cover, being owned by five of the allocators we monitor, while that T Rowe Price fund is owned by just one other buyer, Casterbridge.
T Rowe Price’s Structured US Research Equity fund is about £450mn in size.
Buckingham told Asset Allocator: “Economic data has improved significantly since the turn of the year, with the US economy in particular continuing to prove more resilient than we expected. This has seen the probability of a US recession fall and therefore we marginally increased equity risk in portfolios to reflect this.
"Historically we had not found an active US equity fund that we felt was as strong (or stronger) than a passive, when it comes to consistency of performance and cost. We feel this fund is a very strong candidate and in turn warrants a place in portfolios. The fund is an analyst driven research portfolio, combined with a portfolio oversight team to enable alpha via stock selection with benchmark-like volatility and characteristics.
"There are approximately 30 analysts on the strategy who each are responsible for a number of stocks in certain sub-sectors. The portfolio oversight team are then responsible for monitoring overall portfolio exposures in conjunction with analysts to maintain benchmark-neutral sector/factor exposures.”
He says the fund has a track record of beating the index.
Overall, Abrdn is marginally underweight equities, having added to Europe ex-UK, in the quarter.
They funded the increase to the US and European equity slices with a reduction in cash.
Despite the more optimistic economic view, Abrdn retains a stout overweight to bonds, being overweight US and UK government bonds and also owning a global government bond fund.
This overweight is accommodated by being underweight to absolute return funds. Buckingham said this doesn't reflect an aversion to absolute return, indeed they like the asset class. But they regard fixed income as more attractive at the moment.
