Volatile equities sees Russell adopt market-neutral stance

Cazenove's Tim Russell is running a broadly market-neutral approach in his UK Absolute Target fund as equities display heightened volatility.

The manager says the market is increasingly divided on a sector level, with cyclical stocks more sensitive to index movements and defensives less sensitive. Cazenove believes it is much more difficult to take large long or short bets in this environment. Cyclicals are now very expensive compared to long-term levels, Russell says, and defensives correspondingly cheap. “Cyclicals gave investors the most upgrade potential in the short term because analysts downgraded expectations so much during the downturn,” he says. “As time goes by, the risk of holding cyclicals goes up.” Cazeno...