Fund of the week: Promise little, deliver lots
Aug 15, 2008
BlackRock's Mark Lyttleton should be ecstatic. Over the past 12 months, his UK Absolute Alpha Fund has returned 7.5%, against a 15% drop for the market. But instead of slapping his face on billboards across the country, the 37-year-old would rather "just plod along quietly", doing his best to continue making people money. "We'd like to under-promise and over-deliver," he tells The Sunday Times, "rather than shout from the rooftops about how great we've done."
While most of his positions are long, Lyttleton can also short stocks like a hedge fund – only without charging the hefty performance fees. He "has put the arguably overpaid and over-rated hedge fund community to shame with his market-neutral UK Absolute Alpha", says Rob Pemberton of HFM investment on IFAonline.co.uk.
So what does he like now? Despite a recent fallback, he is bullish on oil, hence his holdings in Tullow Oil and Sibir Energy. "Our view (is) that the oil price will remain structurally high for the next few years due to supply/demand imbalances," he tells Investment Week. Another top holding is weapons and aviation giant BAE Systems. "BAE is very large firm with a very visible order book, good cash flows, and is quite attractively valued," he tells Thisismoney.co.uk. Aiming to deliver a steady 8%-10% return every year, "if you are nearing retirement [the fund] could be an excellent way to give your pension some defence against falling markets", says Mark Dampier of Hargreaves Lansdown.
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BlackRock's UK Absolute Alpha Fund top holdings
Name of holding - % of assets
William Hill - 1.70
BAE Systems - 1.70
Imperial Tobacco Group - 1.60
Friends Provident - 1.50
Dolphin Capital Investors - 1.40
Vodafone Group - 1.30
Hammerson - 1.20
Tullow Oil - 1.10
Severn Trent - 1.10
Sibir Energy - 1.00
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