Anthony Cross is bluntly bearish in his outlook for the British market. “I’m not that optimistic,” he says in The Daily Telegraph. He sees tougher times ahead “as household budgets are squeezed. Retail, housebuilding and commercial property all look vulnerable,” he says in The Mail on Sunday.
Cross manages the Liontrust Special Situations Fund, which concentrates on British firms ranging from blue chips to Aim-listed stocks. As a result of his caution he is focusing on cash-rich companies with a global presence – the fund is heavily invested in both Royal Dutch Shell and GlaxoSmithKline. “Some British firms have recovered well because they have been exporting into overseas markets. But any recovery in more British-focused, consumer-oriented sectors has been surreal.” His, and co-manager Julian Fosh’s, relatively safe tack has paid off for investors. The fund has returned 59.4% over the past three years, compared to just 14.3% for the FTSE All-Share.
But Cross isn’t entirely optimistic about the future for those British companies experiencing growth abroad. “The biggest problem facing fund managers and all those who are trying to work in the financial markets is how much of the growth that you are seeing elsewhere on the globe, particularly from the pick-up in the United States, how genuine that is and how much of it is being pushed by quantitative easing and the printing of money.”
Cross’s pessimism may explain why, unusually, the fund’s largest holding is cash (9.73% of net assets at the end of December 2010).
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Liontrust Special Situations Fund top ten holdings
XXX Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Royal Dutch Shell | 4.17 |
| Compass Group | 4.11 |
| BG Group | 4.08 |
| RWS Holdings | 3.64 |
| BP | 3.61 |
| GlaxoSmithKline | 3.48 |
| AstraZeneca | 3.33 |
| Next Fifteen Communications | 3.20 |
| System C Healthcare | 3.09 |
| Unilever | 2.99 |