Mark Dampier: The overlooked BlackRock fund with an overseas view

The Analyst

The pound, as you may have noticed, has recently weakened substantially against the dollar and the euro. Not ideal for those wishing to enjoy some winter sun or snow. Currency has always been notoriously hard to forecast, but given the amount of quantitative easing in the UK, plus the low interest-rate environment and the poor economic backdrop, it is not surprising to see sterling take a tumble.

Rather than bemoaning your holiday cash, one way to try to take advantage is to look at funds investing in global leading businesses. The earnings of international firms are denominated in a range of currencies – so when sterling falls, overseas profits increase. Although he invests in the UK market, Richard Plackett, who runs BlackRock UK Special Situations Fund, feels many of the stocks in his portfolio have vast overseas earnings potential, and their earnings streams will look even stronger against a backdrop of weak sterling.

Mr Plackett has been managing the fund since 2004 and adopts a "multi-cap" approach to investing. This means backing companies of all sizes, from FTSE 100 behemoths to smaller firms that dominate niche areas. What I like about this approach is the flexibility. If investments are successful, they can grow with the fund, and he can potentially run smaller companies winners all the way to the FTSE 100. Interestingly, of the 65 stocks in the portfolio today, 23 have been held since his first year – so he can hardly be accused of being a short-term trader!

Investing throughout the market spectrum also provides diversification across a number of sectors. For instance, larger companies often fall into the consumer goods, financials and healthcare sectors. Although, the fund invests in these areas, its flexibility to invest in smaller companies allows significant exposure to more economically sensitive sectors such as industrials and technology.

Mr Plackett moves aggressively between larger and smaller companies, depending on his outlook. If he is cautious, the weighting in larger companies will increase as they tend to be biased to sectors with more defensive characteristics. Small and medium-sized companies account for around half of the portfolio, given his reasonably optimistic stance.

Performance during Mr Plackett's tenure has been impressive, with the fund returning 153.4 per cent against the sector average of 77.1 per cent. Much of this is attributable to good stock selection in smaller companies. These holdings have often been subject to takeovers, frequently at significant premiums to market price. Indeed, the portfolio has typically had one or two takeovers a year since 2004.

High-quality stocks with low levels of debt are also a feature of the fund. Mr Plackett seeks businesses with solid balance sheets that have accumulated large cash reserves. He is happy to see companies build their cash levels, providing they intend to reinvest the cash into new projects or return it to shareholders via dividends. There are currently overweights in technology, industrials and construction with a zero weighting in tobacco and utilities.

Mr Plackett is optimistic about 2013, believing the Government will continue to print money, which means many assets are likely to go up further in price. The portfolio is likely to remain biased towards high-quality smaller-company stocks where Mr Plackett and co-manager Richard Arnold have plenty of experience. Interestingly, they believe equities remain reasonable value in general terms and very good value in a relative sense against other asset classes such as bonds. They believe the "opportunity cost" of not holding equities is high – something investors staying in cash over the last year have already found to their cost.

In summary, this fund is well-placed to benefit from global growth, though it means performance could be volatile if international markets suffer. Mr Plackett is often overlooked, with Tom Dobell at M&G Recovery and Nigel Thomas at Axa Framlington UK Opportunities often attracting more money, but his is definitely a fund to consider given the experience and dedication of the team.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit www.hl.co.uk/independent

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

PROMOTED VIDEO
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Voices
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

News
i100
Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

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

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Senior Helpdesk Analyst / Service Desk Co-ordinator

    £27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

    Senior Pensions Administrator

    £23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

    Corporate Actions Administrator / Operations Administrator

    £25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

    Day In a Page

    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
    Let's talk about loss

    We need to talk about loss

    Secrecy and silence surround stillbirth
    Will there be an all-female mission to Mars?

    Will there be an all-female mission to Mars?

    Women may be better suited to space travel than men are
    Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

    'They poured water on, then electrified me...'

    If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
    James Wharton: The former Guard now fighting discrimination against gay soldiers

    The former Guard now fighting discrimination against gay soldiers

    Life after the Army has brought new battles for the LGBT activist James Wharton
    Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

    Panic over Ebola threatens to infect the midterms

    Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
    Premier League coaches join the RSC to swap the tricks of their trades

    Darling, you were fabulous! But offside...

    Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
    How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

    How to dress with authority

    Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
    New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

    New book on Ian Curtis sheds fresh light on the life of the late singer

    'Joy Division were making art... Ian was for real' says author Jon Savage
    Sean Harris: A rare interview with British acting's secret weapon

    Sean Harris: A rare interview with British acting's secret weapon

    The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
    Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

    Tim Minchin interview

    For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
    Boris Johnson's boozing won't win the puritan vote

    Boris's boozing won't win the puritan vote

    Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
    Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

    Tim Wheeler: Alzheimer's, memories and my dad

    Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album