Gartmore pledges turnround on UK equity fund

Gartmore’s Leigh Himsworth has pledged a performance turnaround on the group’s UK equity fund range after he revamped the funds’ remits.

Mr Himsworth said he expected to start notching up inflows on the range after launching a higher-conviction strategy and pushing into mid caps.

He said: ”What was needed was a little more structure, and I think we’ve got that now. And if you are going to add value, then it probably means you are going to have to move down the cap scale a bit.”

The manager joined the group at the end of September 2009, having been brought in by chief investment officer Dominic Rossi to lead an improvement in performance.

In 2008, Mr Himsworth had led a shift into a high-conviction, high-alpha model for Royal London Asset Management’s UK equity funds, which had been dogged by underperformance.

Mr Rossi also hired Aviva’s Dan Roberts in July 2009, then F&C’s Luke Newman in August, as he fought to plug outflows on the range that had fallen to the bottom of its sector in terms of performance.

Former managers on the range, such as Sacha Sadan and Simon King, were taken off funds after performance plunged due to holdings in areas like banking and housebuilders.

The worst-performing funds include Gartmore UK Alpha, which is 280th in the 281-fund IMA UK All Companies sector for three-year performance, having lost 37.2 per cent.

Gartmore UK Growth is bottom-decile, with a 21.2 per cent loss, and Gartmore UK Equity Income is middle-of-the-pack in the IMA UK Equity Income sector, with an 8.4 per cent loss.

Mr Himsworth said the team was blending large-cap UK equity names with smaller companies in an attempt to capture higher growth.

For oil exposure, for example, the manager has targeted BP along with smaller companies like Tullow Oil.

Mr Himsworth said: ”You should spend some time picking the best companies in a sector.

”You have to make sure all the stocks in your portfolio are contributing in some way to performance.”

He said he was bullish on the outlook for the UK equity market, with interest rates set to stay low.

”You have to split the UK stock market from the UK economy,” he said. ”The natural starting point is to be negative but we are not in a negative situation.”

He said that fears that the government’s deficit will spiral out of control were overdone.

Also, any tax rises that result from the deficit could actually be helpful to markets as interest rates would remain lower for longer.

”And, sterling may weaken further – that environment is potentially very good news for the stock market,” he added.