Recent events in China have muddied the outlook for economic growth in Western economies such as the UK, according to Simon Murphy, manager of the Old Mutual UK Equity Fund. That said, while he feels UK economic growth may have peaked, growth on the whole remains steady, underpinned by rising household incomes and modest corporate investment.
- In light of recent stock market volatility, the manager has taken advantage of share price weakness. Four new companies have been added to the portfolio: IT companies Arm Holdings and Sage Group; emerging market debt specialist Ashmore Group; and building merchant Travis Perkins.
- Simon Murphy has sold two companies: Anglo American and Aberdeen Asset Management, whose prospects have deteriorated significantly in his view.
- The fund's resource-related holdings have recently acted as a drag on performance. Against a backdrop of falling commodity prices, holdings including Glencore, Genel and BP have suffered. A lack of exposure to some larger companies in defensive sectors such as tobacco and consumer staples, which have held up relatively well in a weak market, also held back returns.
- Overall, the fund provides diversified exposure to a variety of sectors and its sector allocation does not tend to depart significantly from its benchmark, the FTSE All Share index. Therefore we would not expect its performance to deviate meaningfully from the broader market. The fund's concentrated portfolio allows each holding to have a meaningful impact, but it is a higher risk approach.
Our view on this fund
Simon Murphy is an experienced investor, having managed UK equity portfolios since 2003. In managing this fund he is also able to draw upon Old Mutual's well-resourced UK team.
This fund offers core exposure to the UK stock market. However, we currently favour other managers in this sector with stronger track records and a more unconstrained investment approach, which we believe has greater potential to generate outperformance over the long term. As such, this fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.