Aled smith to replace Greg kerr as head of group's global specialist equity team and take over as lead manager on the global leaders fund
M&G Specialist Media & Telecoms fund manager Aled Smith has been appointed head of the firm's global specialist equity team, replacing Greg Kerr.
Specialist financial sector manager, David Jane, former manager of Global Leaders, said Kerr will continue in his role as specialist tech fund manager in charge of the M&G Global Technology fund.
'We didn't want people to think Greg has been demoted because he clearly hasn't,' he said. 'He's still running the top-performing fund in his sector since launch and he wants to concentrate on that.'
Kerr remains as the named manager for M&G Global Leaders and M&G American. Day-to-day management of the £137m Global Leaders fund will be rotated between the various members of the specialist team but Smith will take on a more prominent role.
The move is designed to turn around a period of underperformance over the 12 months to 3 June in which the fund posted a return of -19.67%, after charges, compared to the global growth sector average of -18.85%.
Manager of the M&G Global Basics fund, Graham French, said part of the reason for Global Leaders' underperformance was the team structure of the funds, which failed to sufficiently concentrate the decision-making process.
'It's always a problem with team funds to have really proactive management,' he said. 'You can have a lot of people working on it but you need someone at the top deciding on the big picture.'
Jane added that Smith will introduce a more active allocation process. Rather than running Global Leaders as a collection of cut-down versions of M&G's specialist equity funds, he will guide the specialist managers with regard to Leaders' cash position and sector weightings.
'His role is to test and measure the portfolio and carry out the administrative part,' said Jane. 'With a different person in the role, there will be a slightly different style. We previously took a very passive stance but decided we needed to be more proactive.'
French said the Global Leaders fund is now positioned to take advantage of the higher defence expenditure in the wake of the 11 September terrorist attacks. The fund has also been moved to an overweight position in global large-cap oil, manufacturing and defence stocks.
'One area where one can now be bullish is defence, with global expenditure going up,' he added.
In the UK, the Labour Party has just increased defence spending by 11% for the first time in almost 15 years.
Accordingly, two of the fund's top 10 holdings are Rolls-Royce, which makes up 2.9% of the portfolio, and Honeywell, which comprises 2.6%.
The fund has been conservatively run in recent months, a stance French expects to continue until September in anticipation of at least one more quarter of market uncertainty.
'We've gone into manufacturing companies with very low P/Es such as Ford,' he said.
'We also like the oil sector. It's a good place to be in turbulent times and we've been avoiding tech, media and telecom-type areas.'
Global Leaders' largest holding is in NestlÃ©, at 3.2% of the portfolio. Despite some analysts suggesting food stocks are at their peak, the prospect of continued modest growth means M&G will maintain the weighting.
'If you pick great companies like NestlÃ©, you hold onto them,' French said.
'People say it's only going to give 10% to 15% growth but that's still a great story when a lot of stocks are giving negative returns with no sign of any pick-up.'