Takeovers and AstraZeneca boost Gartmore's Cautious Managed Fund

The Gartmore Cautious Managed Fund is benefiting from a new bout of takeover activity. On Monday, shares in Titan Europe soared after the company's former parent, Titan International, announced that it is in preliminary discussions regarding a potential offer for the company. The possible offer is said to be worth approximately 230 pence per share. Titan Europe currently accounts for 0.6% of the Gartmore Cautious Managed Fund's equity portfolio.

Earlier this month, FKI, which was added last year to the Gartmore Cautious Managed Fund for the attractions of its industrial lifting and energy businesses, received a takeover approach from the manufacturing investment firm and turnaround specialist, Melrose. In addition, Civica, the UK software maker and consultancy, agreed at the end of March to a management buyout in conjunction with 3i, valuing Civica at 270 pence per share. Civica has now been sold from the Fund.

"We're not talking about swallows and summer just yet," says Chris Burvill, manager of the Gartmore Cautious Managed Fund. "What we are seeing, however, is some better news from a number of the smaller companies represented in our fund."

"It is encouraging to see that all of these bids, while not certain, confirm the potential for significant upside for our smaller company holdings. Despite tighter credit conditions, offers are being made at substantial premiums."

At the other end of the capitalisation scale, AstraZeneca said yesterday that it has signed a settlement in its Nexium patent infringement litigation against Ranbaxy Laboratories. The agreement will allow Ranbaxy to start sales of a generic version of Nexium, AstraZeneca's top-selling ulcer pill, under a licence from AstraZeneca in May 2014.

"We'd certainly hoped such an agreement was on the agenda. This is enormously encouraging news for Astra," says Chris.

Gartmore's Cautious Managed Fund has a 3.2% exposure to AstraZeneca. The Fund has beaten its sector average over one, three and five years.