Lifestyle funds reduce defensive bias

In spite of short-term volatility in the equity markets, F&C's Multi Manager team remain of the opinion that markets are in a prolonged, if anaemic, recovery phase that began in March 2009.

To take advantage of this, the team - led by Dean Cheeseman - have been removing the defensive bias in the F&C Lifestyle funds in favour of more dynamic and ‘directional' holdings.

F&C's Lifestyle funds are designed to fit a number of risk profiles identified by Distribution Technology's Dynamic Planner. The funds are regularly rebalanced to ensure they continue to fit these risk profiles.

In recent months the team have increased the proportion of the Lifestyle portfolios allocated to ‘dynamic' strategies, reflecting their favour for strategically managed bond funds such as M&G Strategic Bond and Fidelity Strategic Bond. "With their ability to invest across fixed income markets through a range of investment strategies, these funds have added considerable value," said Cheeseman.

"Our more upbeat assessment also saw a tempering of exposure to what we categorise as ‘defensive' holdings - a classic within equity being Neil Woodford's Invesco Perpetual High Income fund," Cheeseman added. "By reducing such positions, the team was able to increase the emphasis on funds with a more ‘directional' bias - holdings that are better positioned to benefit from markets looking likely to trend upwards." Examples include Richard Buxton's Schroder UK Alpha Plus and Mark Lyttleton's BlackRock UK Equity fund.