Artemis Strategic Assets Retail Accumulation

William Littlewood believes global growth is likely to disappoint over the short term. He has recently been taking profits during bouts of market strength, and topping up when share prices have fallen. For example, economically sensitive stocks were added after stock market falls in August and September, before being reduced after October's rally. Exposure to higher risk smaller companies has been reduced in favour of larger companies, including those with pricing power, which should be able to raise prices and maintain profits even in an inflationary environment.

Commodity exposure is restricted, with around 2.8% in physical gold and 0.3% in platinum. Rather than increasing exposure to physical gold William Littlewood has recently been increasing exposure to gold mining companies, whose share prices suffered in the stock market volatility. He can also use derivatives to dampen volatility and enhance returns, but this is higher risk.

William Littlewood remains pessimistic on the economic outlook for Europe and Japan. He has positioned the fund to benefit from a weakening of both the Euro and Japanese Yen. Conversely he believes currencies should strengthen in more robust economies and has positions in the Taiwanese and Singaporean Dollar, Malaysian Ringgit, Swedish Krona and Norwegian Krone.

The biggest detractor from performance has been William Littlewood's government bond holdings. He believes bonds issued by indebted Western governments such as the UK, Japan and US represent poor value. He suggests these governments will have no choice but to print money and weaken their currencies to eliminate the debt, leading to higher inflation. This is not good for bonds as inflation erodes investors' capital and makes the fixed income they offer less attractive. The fund has been positioned to benefit from rising yields and falling prices, but the opposite has happened as investors viewed the UK, Japan and US as safe havens from euro zone turmoil. He is also able to invest in higher risk high yield bonds.

Overall, we expect William Littlewood's strategy to reward long-term investors and the fund remains on the Wealth 150 list of our favorite funds in each sector.