A return to stock selection

Mark Hall, the highly respected fund manager of Rensburg UK Select Growth Trust has been repositioning his fund over the last year. He commented: ‘We have had serious concerns about the macro-economy. But as we came through the bottom of the cycle in late 2008, we started shifting into sectors likely to be amongst the earlier beneficiaries of recovery - Retail and House-builders. More recently though we have been uncovering better value in late cycle sectors - Industrials, for example. These moves have been funded primarily by selling down some of the larger FTSE 100 stocks that we had previously brought in as a defensive measure in the earlier phase.'

He continued: ‘In the last six months there have been two emerging themes worthy of mention. First, management teams that have brought shareholders rich rewards in previous cycles have been asking for capital to take advantage of the growth opportunities coming through in the next cycle. Three names we have been happy to support are Hansteen in Real Estate, Vertu, the motor distributor and Advanced Computer Software in IT. Second, we have been looking closely at a number of opportunities to participate in the refinancing of financially distressed businesses which have been priced to reflect possible failure - and have enjoyed attractive returns from those we invested in, Taylor Wimpey for example.

‘Looking forward, I'm a lot more comfortable with the idea of becoming more adventurous in my stock selection and re-introducing more risk into the portfolio. Certainly there's scope to venture more into the small and mid cap arena and these high conviction ideas can be funded from further sales of defensive blue chip stocks which have belatedly taken part in the recent rally. We believe that equity issuance will remain a major feature of the market and continue to provide liquidity events for the introduction of cash. There are still a lot of companies that need equity injections into their balance sheets and we're well placed to take advantage of the opportunities that will undoubtedly arise.'