Zenith Investment Partners has upgraded two Allan Gray funds to ‘highly recommended’ in its latest Australian Shares Large Companies review.
Allan Gray Australia Equity Fund and Allan Gray Australia Stable Fund join 14 other funds rated ‘highly recommended’. They include funds managed by Alliance Bernstein, Alphinity, Bennelong, Firetrail, Greencape, L1 Capital, Lazard, Pendal, Perpetual and Solaris.
The other upgrade was the Platypus Australian Equities Fund, which moved up from ‘approved’ to ‘recommended’.
Zenith surveyed active Australian equity managers and asked them which market cap segment was the most attractive in the coming year. The top pick was the S&P/ASX 51 to 100, followed by the 21 to 50 stocks, and 101 to 200 stocks.
Those results are consistent with last year’s survey.
The average number of portfolio holdings for active funds reviewed was 51, down from 53 the previous year.
The active manager with the highest number of holdings was the Dimensional Australian Core Equity Trusts, which has a portfolio of 428 stocks.
The smallest portfolios – each with 20 stocks – were the Perpetual Pure Value Share Fund and the Bennelong Concentrated Australian Equities Fund.
The average allocations to financial stocks was 26.4 per cent – down from 29.6 per cent last year and below the index weighting of 30.9 per cent (the index was the S&P/ASX 300). This was the biggest underweight position.
One fund, the Antares Dividend Builder, had a 46 per cent allocation to financials – the highest in the survey. Two funds, the Legg Mason Martin Currie Real Income Fund and the Bennelong Concentrated Australian Equities Fund, had no exposure to financials.
Allocation to materials was 17.1 per cent – up from 16.4 per cent last year but below the index weighting of 19.9 per cent.
Allocation to consumer cyclicals was 10.9 per cent – down from 11.8 per cent last year but well above the index weighting of 6.7 per cent. This was the biggest overweight position.
The SGH ICE Fund has the highest allocation to consumer cyclicals, at 26.4 per cent. The Allan Gray Australia Stable Fund had the lowest, at 1.3 per cent.
Allocation to industrials was 8.6 per cent – up from 7.2 per cent last year and above the index weighting of 7.5 per cent. Allocation to healthcare was 6.4 per cent – up from 5.8 per cent last year but below the index weighting of 8.3 per cent.
Allocation to consumer non-cyclicals was 6.1 per cent, energy 5.6 per cent, real estate 4.6 per cent, utilities 2.6 per cent, telecommunications services 3 per cent and technology 2.7 per cent.
There were 21 funds with no allocation to real estate.