Manager of the M&G Global Themes fund Alex Araujo has finalised a complete restructure of the £2.2bn portfolio, exiting more than half of the holdings since the start of the year in favour of a new crop of stocks.
Araujo was appointed as manager of the fund in January, following the departure of previous manager and director of global equities Jamie Horvat, with M&G signalling at the time that the portfolio would be moving "in a different direction" under its new leadership.
Specifically, the new-look portfolio now invests in four structural trends: demographics, environment, infrastructure and innovation. As a result, the sector and geographic weightings of the fund now greatly differ to those at the start of the year.
At the end of last year the fund's largest weightings by sector were to TMT, consumer products, basic materials and healthcare, at 19.7%, 21.4%, 17.9% and 17.2% respectively, according to FE.
Seven months later, the weightings to the same sectors stood at
16.2%, 16.1%, 13.8% and 11.8% respectively, as of 29 July.
Araujo explained: "There were some sector allocations that were skewed; it is now, to my mind, more balanced than it was when I inherited it."
The reduction in the allocation to consumer products over the period was to move in favour of building positions of 7.7% and 4.9% in utilities and real estate respectively.
Meanwhile, the portfolio's exposure to industrials and financials has also grown from 11.3% each to 14.5% and 14.4% respectively.
From a regional perspective, the fund's exposure to North America has increased from 46.3% to 54.2% over the period, with Japan and Australasia other examples of geographic exposures that have increased.
Araujo said the changes reflected existing "structural biases" that his team "wanted to correct", one of which was "quite a large underweight to North America".
The manager also noted there were some individual holdings he and deputy fund manager Stuart Rhodes kept within the fund, but some "did not fit" the new thematic approach.
He approximated the pair inherited 51 holdings, 34 of which were sold off while 29 new holdings have been added.
He explained: "There has been a concerted restructuring of the fund, which took the better part of seven months, but it is now where we want it.
"The restructuring centred on the four core themes that we decided we wanted exposure to, so we set about divesting from holdings that did not fit those themes and investing in businesses that did.
"The biggest set of exposures in the fund are now from the demographics theme, because that is where we access exposure to things like health, as well as financial and consumer, for example.
"We took a decision to, in a sense, start with a blank sheet of paper and get the fund to where it is. We did change up the portfolio quite a bit.
"But we are pleased to say that we have got there, and the fund has performed well, while the restructuring has not affected asset values."
The fund has returned 26% since the beginning of the year to 1 August, according to FE, while the IA Global Sector has averaged 22.2%. Over five years the fund and the sector have returned 70.25% and 72% respectively.