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Tilney Smith & Williamson’s Burns: “Now is not the time to panic sell out of UK funds”

Despite a disappointing year for the UK compared to the US, there is still room for outperformance from UK strategies, according to James Burns, co-manager of the Smith & Williamson Investment Management’s MPS.

“Now is not the time to panic out of our stance held last year, and it still makes sense to be in markets that are better value.” said Burns, who alongside his team manages six portfolios across a range of different risk profiles.

“Frustratingly, despite some correct asset allocation calls in 2021, some of our UK positions disappointed relative to the market,” he said.

Burns said that some positions, most notably Ninety One UK Alpha, lagged the benchmark significantly, although the portfolios’ positions in RWC UK Equity Income, Artemis UK Select, Troy Income & Growth Trust and Premier Miton UK Multi-Cap Income performed very well in 2021.

But although the UK again lagged some other markets globally, Burns believes that, despite it being early in the year, there are signs that the UK market in 2022 is already starting to perform well.

“Oil and banks have both been on an upwards trajectory this year,” said Burns. “Alongside Asian Emerging Markets, we expect the UK to have a good 2022.”

“With the exceptional growth we have seen in the US, we are waiting for the realisation from the market that what’s gone up so high in the last few years can also come down, and investors may come to realise that it’s time to start looking at cheaper markets such as the UK,” he said.

Burns said that some positions, most notably Ninety One UK Alpha, lagged the benchmark significantly, although the portfolios’ positions in RWC UK Equity Income, Artemis UK Select, Troy Income & Growth Trust and Premier Miton UK Multi-Cap Income performed very well in 2021.

“Going forward, we are looking to Ninety One UK Alpha to turn around its bad year in 2022,” said Burns.

“Fund manager Simon Brazier has a good track record, and we have also been able to access a cheaper share class which allows us to pass on more of the performance gains to clients.”

Elsewhere, Burns is also looking to see RWC UK Equity Income continue its positive momentum from 2021. In closed ended positions, Burns and his team also hold Blackrock Smaller Companies in the more growth-focused portfolios, which they also expect to perform well in 2022 as investors begin to recognise the opportunities in the UK market.

Burns says the team remains overweight equities following a recent portfolio rebalance in December, which also saw the team take advantage of the Tilney Smith & Williamson merger to gain access to cheaper share classes in some funds.

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