Fund of the week: Profit from a falling pound
Feb 11, 2013
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A fall in the pound is bad news for holidaymakers, but it has its advantages too. “Rather than bemoaning your holiday cash,” says Mark Dampier in The Independent, why not look for funds, such as BlackRock UK Special Situations, which invest in leading global businesses? Many of these firms earn their money in different currencies, so when sterling falls, overseas profits rise.
Manager Richard Plackett claims many of his stocks, such as Unilever and Shell, have considerable overseas earnings power and could see revenues boosted by sterling’s weakness. He certainly has the right track record, with 22 years of investment experience that has included successes at M&G and with BlackRock’s smaller-companies and income funds.
Plackett’s aim is to visit 1,000 firms a year, looking for stocks that are undervalued against their projected cash generation, or are recovery plays. Preferring to avoid firms with high debt levels, he favours those with strong balance sheets and significant cash reserves.
Plackett has free rein to invest in small-and mid-cap stocks, which make up around 65% of the fund’s total holdings. The strong performance of smaller firms, as well as a fillip from takeovers, says Dampier, has helped the fund return 153.4% during Plackett’s tenure compared to a sector average of 77.1%.
According to Trustnet.com, the fund generated a return of 17.5% over one year and 54.6% over three years. Currently 24% of holdings are in industrial stocks, 15.8% in financials and 13.1% in oil and gas stocks. It’s for risk-tolerant investors looking for British firms with a focus on overseas profits. The total expense ratio is 1.67%.
Contact: 0800-445522.
BlackRock UK Special Situations top holdings
| Name of holding | % of assets |
|---|
| HSBC Holdings |
5.10% |
| Rio Tinto |
4.50% |
| Royal Dutch Shell |
4.50% |
| BHP Billiton |
4.40% |
| Aveva Group |
3.80% |
| Rotork |
3.10% |
| Victrex |
3.10% |
| Vodafone Group |
3.10% |
| Unilever |
3.00% |
| Senior |
2.90% |
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