T Bailey

T. Bailey Growth Fund has major strategic asset alloction review

Published 12:00AM 26 March 2009

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• T. Bailey Growth Fund to see UK benchmark cut back
• Exposure to US and emerging markets to rise 

T. Bailey has asked investors to approve a new strategic benchmark for its long-established T. Bailey Growth Fund.

It follows the fund’s triennial strategic asset allocation review.  T. Bailey has drawn up plans to reduce the current exposure to UK markets from a current benchmark of 40% to 25%.  The weighting towards the US will rise  from the current 15% to 25%.  Exposure to emerging markets will rise from 15% to 17.5%.

Figure 1 shows the benchmark at time of writing (effective since 1 April 2006); figure 2 the proposed benchmark. 

T. Bailey Assistant Fund Manager, Elliot Farley said:  “The  T. Bailey Growth Fund has been a top quartile performer since its launch on 13 December 1999 (source: T. Bailey, Lipper Hindsight. Figures to 28 February 2009) and the benchmark asset allocation has been key to that success. 

“We estimate that since launch the benchmark itself has added 1.12% a year on average to performance against the IMA Global Growth Sector average (source: T. Bailey, Lipper Hindsight. Figures to 2 March 2009).   That’s before you add  in  the benefits of  tactical asset allocation and fund selection. 

“The benchmark  takes account of geopolitical, economic and market trends. We have flexibility around it to make shorter-term tactical calls, but this represents our long-term view of where the global economy is heading in the next three years.”

The changes, which have already been approved by the FSA, will be voted on by unitholders on Monday 30 March. 

T. Bailey Chief Investment Officer Richard Martin said: “The increase in US exposure reflects our view that the US will fare better than many other developed nations as a result of the resurgence of the dollar, its resilient and resourceful private sector and the fact that it was the first economy to encounter problems and likely to be the first to recover.

“The UK is still important, but within a global portfolio we feel it makes sense to pull back exposure.   The UK is in particularly difficult circumstances as a result of heavy Government and  personal indebtedness, weak balance of payments and heavy dependence in recent years on the financial services sector for growth.”

He said  the increase in exposure to emerging markets reflected T. Bailey’s view on the acceleration of the transfer of economic power from the developed world to the East.

He said: “The T. Bailey Growth Fund has always had a higher exposure to emerging markets than many global portfolios and that has been one of the factors in its success.  China and India may be suffering from the backwash of slowing Western economies, but growth is still likely to be greater there than in the developed world.  We think that, despite the challenges they face, these and many of the Emerging Market countries will emerge from the current turmoil with increased standing.”

Figure 1:  T. Bailey Growth Fund benchmark at the time of writing (effective since 1 April 2006)

Region (Equities)	Index	Weighting	Permitted range: +	Permitted range: -
UK	FTSE All-Share	40.0	20.0	20.0
US	S&P 500	15.0	15.0	15.0
Europe (ex. UK)	FTSE World Series Europe (ex. UK)	15.0	15.0	15.0
Japan	Topix	7.5	7.5	7.5
Pacific Basin (ex. Japan)	MSCI AC Far East (ex. Japan)	7.5	7.5	7.5
Emerging Markets	MSCI Emerging Markets	15.0	15.0	15.0
Cash & other investments		0.0	20.0	0.0
		100

Source: T.Bailey

Figure 2:  The proposed benchmark to take effect from 1 April 2009.

Region (Equities)	Index	Weighting	Permitted range: +	Permitted range: -
UK	FTSE All-Share	25.0	25.0	25.0
US	S&P 500	25.0	25.0	25.0
Europe (ex. UK)	FTSE World Series Europe (ex. UK)	15.0	15.0	15.0
Japan	Topix	7.5	12.5	7.5
Pacific Basin (ex. Japan)	MSCI AC Far East (ex. Japan)	10.0	10.0	10.0
Emerging Markets	MSCI Emerging Markets	17.5	12.5	17.5
Cash & other investments		0.0	20.0	0.0
		100

Source: T.Bailey

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