Mark Dampier: The market is ready to rally at last

The Analyst

This week I thought I would talk about three funds rather than the usual one. All three are centred on the UK market and two I have already featured this year – namely the Standard Life Recovery Fund and the Schroder UK Alpha Plus Fund. The remaining fund is a new launch from Old Mutual, the UK Dynamic Equity Fund.

If you read my comments last week you will know that I am fairly gloomy about the state of the UK economy. The question is how much of the bad news is already reflected in the market. Back in March, the market seemed to be priced for the very worst outcome – the subsequent rally since then has been based largely on the fact that things are getting less worse. Companies that were expected to go bust have been brought back from the brink, notably the banks.

The three managers of these funds all remain optimistic, but are definitely not bulls of the UK economy. Investors should remember the economy and market do not necessarily behave in the same way.

The Standard Life Recovery Fund was launched near the low point of the stock market in early March. David Cummings, head of UK equities at Standard Life, has had a fantastic spell, with the fund rising over 50 per cent. In the last week he added even more of his own money to the fund, believing the market can hit 5,000 by the end of the year.

He does not expect to see it below 4,000 again. The Standard Life team is relatively upbeat seeing many opportunities coming through its door every day. Bear in mind it manages over £30bn worth of equities so have considerable expertise.

In January, I highlighted the Schroder UK Alpha Fund. The fund had experienced a fairly torrid time and its weighting in banks had been detrimental to performance. However, since then it has rallied very strongly and, in a recent meeting with Richard Buxton, I found him optimistic on his portfolio.

He has been trimming his holdings in banks and other successful holdings – including Next, Home Retail and Reuters – but he has not sold any completely. He believes, like David Cummings, that we have seen the low point and are now in a trading range.

He believes the real test will come in the autumn when we will see whether company orders are really picking up. Into next year he believes that GDP will not be much more than 1 per cent – and it could even be less – but, either way, it is going to be a tough environment. It is here that his stock-picking abilities will come through. He thinks there will just be a few winners and his portfolio is concentrated at 32 stocks. He is looking for companies with good earnings visibility, which will grow through a tough economic environment.

These include Experian and BG, while he has also been buying Glaxo which he views as far too cheap.

That leads me on to the new Old Mutual UK Dynamic Equity Fund where I have found the manager, Luke Kerr, in a similar frame of mind. However this fund does have slightly more ammunition in that it can also short. It is not an absolute return fund; in fact, it will have the characteristics of a long-only fund, but with some defensive qualities when the market falls.

This is Old Mutual's best ideas portfolio, so it has a hunting ground across the market capitalisation, but their real expertise – and where they find the most opportunities – do tend to be the mid and small cap area. The fund is also likely to be limited in size at around £200m.

This is a fund to take a look at sooner rather than later as I believe the team behind it is one of the strongest in the city.

Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week