RADAR backs US equities with 28.3 per cent portfolio allocation

Insight

– Total equity exposure of the Fund increased to 69.3 per cent as of end of May

– 28.3 per cent allocation to US equities

Barclays Capital Fund Solutions, Barclays Capital’s £4bn AUM in-house fund manager, has increased the equity exposure of its flagship Research Analysis Driven Absolute Return (RADAR) fund to 69.3 per cent of the Fund portfolio, up from 39.2 per cent as of the end of April. The allocation decision was taken on the back of the belief that the recent sell off seen across global markets was driven by fear rather than fundamentals.

As part of this decision the fund has also allocated 28.3 per cent of its portfolio to US equities with the Barclays Capital Research team believing that the fiscal problems in Europe will have less impact on the US than other regions.

The fund, which was launched on 17^th February 2009 (sterling denominated Share Class E), is a long short macro tactical asset allocation fund designed to exceed or match global equity returns in a bull market and also outperform tactical allocation funds during bear markets.

The fund, which draws on the considerable resources of Barclays Capital’s 800-strong research team for its asset allocation decisions, outperformed the S&P 500 by 3.6 per cent in May – with nearly half the volatility – taking its net return since inception to 22.1 per cent and its net one-year return to 7.3 per cent (source: Bloomberg as of 28^th May 2010).

Commenting Nathan Bance, Director in UK Investor Solutions at Barclays Capital said: “May was a very troubled month in the market with news such as Germany banning the short selling of bonds and some financial stocks leading to market turbulence. However, Barclays Capital Research continues to hold a cautiously bullish view on markets driven by economic fundamentals continuing to help the case for further rises in risk assets. Also contributing to the allocation calls was the Research view that the fiscal issues within Europe were likely to push back monetary tightening at key Central Banks. For these reasons Barclays Capital Research has recommended initiating a 28.3 per cent position in US Equities as the research team believes the US market should be less affected by European Union concerns and likely to benefit from improving economic fundamentals.”

“RADAR was able to outperform the S&P 500 through its asset allocation calls and hedging intra-month its long exposure to equities. The net result of these changes has been a rise in RADAR investment in equities, credit and FX from 53.8 per cent at the end of April to 93.4 per cent of the Fund at the end of May”