BAT to Implement Separate Global Market Strategies

Source from:  Investment Week 06/03/2009

F&C's British Assets Trust (BAT) will benefit from a move to separate emerging and developed markets stock selection, according to its chairman. The globally invested trust has consolidated its portfolio construction from a range of separately chosen regional portfolios under lead manager Julie Dent. According to the company's half-year results to 31 March, it made a pre-tax loss of ￡65.75m, compared to ￡124.4m in the previous six months. AUM fell around ￡75m during the period, from ￡333.5m to ￡258.4m, while the NAV per ordinary share in BAT dropped 27.5%, from 114p to 83.3p. Company NAV fell by 20.3% during the period compared to -17% of the composite benchmark of 75% FTSE All-Share and 25% FTSE World (ex UK) Index. BAT's share price total return fell by 13.6%, which it says reflects a narrowing of the debt-adjusted discount (which was 2% at 31 March compared to 8% at 30 September 2008). Trust chairman William Thomson claims the company's emerging markets stocks performed well in this time but performance was hampered by private equity holdings in Europe. "The emerging markets portfolio delivered positive performance during the period, in terms of both stock selection and asset allocation," he says. "This was, however, offset by negative stock selection elsewhere in the portfolio. "The bulk of the underperformance in the UK was attributable to the company's investment in Standard Life European Private Equity Trust plc which, along with the private equity funds of funds sector in general, fell heavily in value during the period." But he adds the decision to alter the way the portfolio is chosen will improve the quality of stocks chosen. Thomson says: "During the period the board agreed with the managers the overseas portfolios would be consolidated into two portfolios, a global developed markets portfolio, which is managed using quantitative stock selection techniques, and an actively managed global emerging markets portfolio. "This change has meant moving away from regional portfolios based on geographic domicile. "The reason for the change is to provide greater focus on the best individual investment opportunities overseas." He concludes by predicting continued volatility in stock markets worldwide and questioning further moves by governments to boost economies. Enditem