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Mid Wynd managers sell the US and look east to beat slump

by Chas Saenger (2020-04-17) - The managers of investment trust Mid Wynd have not been slow in reacting to the economic turmoil resulting from the coronavirus pandemic.

In recent weeks, the Artemis team that runs the £250million trust has been busy shifting the portfolio geographically towards the East, buying new stakes - or topping up existing ones - in both Japanese and Chinese companies. 

In contrast, selective holdings in US companies have been disposed of. 

The result is a global investment fund that's now far more defensive than it was a month ago. 

Out have gone US banking stocks Citigroup and Citizens Financial Group as well as US railway companies Union Pacific and Norfolk Southern. 

In have come Japanese companies Daikin (a manufacturer of air conditioning units) and Toyota Industries that builds car engines and forklift trucks. 

In China, new positions have been built in entertainments giant Tencent and telecoms mast builder China Tower. 

Existing holdings in Kao (Japan's answer to Unilever); Japan's communications giant NTT; and insurer China Life have all been topped up. 





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Simon Edelsten, one of the three managers overseeing the fund, says a 'perfect' portfolio three months ago is no longer perfect today, hence the changes. 

'By doing what we've done,' he adds, 'we've improved the overall balance sheet strength of our holdings and made the trust more resilient. 

'If markets improve, the trust's performance will lag behind, but I'm comfortable with that. Preservation of investors' capital is all-important.' 

Although the fund still has half its assets in the US, this is a geographic position reduced from this time last month (56 per cent). 

Edelsten believes the American coronavirus situation is going to get much worse. 'They're three weeks behind the UK in terms of reacting to it,' he says. 'And they've been too bull-headed about it all. It could get somewhat nasty.' 

Despite this prognosis, he argues that corporate giants such as Amazon will continue to thrive. 

The stock remains the trust's biggest holding. The defensive nature of the 70- strong portfolio is demonstrated by the fund's holdings in UK companies National Grid and Reckitt Benckiser, a producer of hygiene products such as Dettol. 

A stake in telecoms giant Vodafone has also just been built up. 'We're going to need to communicate more than ever,' says Edelsten. 

'Having cut its dividend last year, Vodafone seems in a better position to sustain it in the future.' Edelsten believes a raft of companies will not survive the oncoming months - for example, some airlines and retailers. 

Yet he's confident he has put in place a portfolio that 'could cope with a bad recession'. 

He says: 'Yes, there are some rubbish companies out there and they will go bust. 

'As a fund manager, I remain very much in cautious mode.' Performance- wise, Mid Wynd has shown its capital preservation bent. 

Over the past year, it has delivered investors an overall return of three per cent. This compares with a 13 per cent loss recorded by the average global equity fund and a 23 per cent loss registered by the FTSE All Share Index. 

Over the past five years, it has made overall gains of 71 per cent. The trust's annual charges total 0.51 per cent and dividends are paid twice-yearly, equivalent to a modest annual income of one per cent. 

Sister fund Artemis Global Select is run in similar fashion to Mid Wynd, but is not stock market listed. 

Stock Exchange identification code: B6VTTK0.


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