As gold continues to hit record prices, long-term gold bugs are starting to wonder if it’s time to cash in. Stephen Bailey and Jan Luthman, managers of the CF Walkers Crips UK Growth Fund, have made their decision. “We thought gold looked a relatively crowded trade and we had been in it for four years,” Bailey told Citywire. The pair sold 25% of their gold stake, which equates to around 2% of the fund, and have reinvested the proceeds into UK shares that would benefit from a pick-up in demand for commodities, buying industrial specialists such as Weir Group and Fenner and beefing up stakes in miners Rio Tinto and BHP Billiton.
They are pretty pessimistic right now. “The gloomy outlook in Britain” is more worrying than the eurozone crisis, says Luthman in Investment Week. “This is negative for wage growth, negative for employment, and sterling will continue to weaken relative to Far Eastern and resource-rich economies.” That’s why the pair like to focus on British firms with exposure to foreign markets. “Global growth is slowing but we want to be exposed to those areas that are still growing, at more attractive entry levels,” says Bailey.
Mark Dampier at Hargreaves Lansdown agrees: “Developed markets such as Britain are often overlooked in the rush for emerging-market growth, but there are many UK companies that derive a significant proportion of their earnings from faster-growing overseas economies.” Dampier is “positive on the prospects for this fund”. It has returned 16.32% and 16.50% over the last three and five years respectively. Over the last ten it is up 83%.
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CF Walker Crips UK Growth Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Anglo Pacific | 5.1 |
| Vodafone | 5.0 |
| BG Group | 5.0 |
| GlaxoSmithKline | 4.9 |
| Unilever | 3.9 |
| Imperial Tobacco | 3.9 |
| BP | 3.7 |
| Reckitt Benckiser | 3.6 |
| BT | 3.5 |
| Royal Dutch Shell | 3.2 |