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Credit Suisse Asset Management's UK Equity Alpha Fund maintains its defensive growth position

Credit Suisse Asset Management (CSAM) believes consumers will be spending less and saving more and this continues to provide the basis for a number of investment themes in their CS UK Equity Alpha Fund.

The Fund, launched in April 2004, is constructed on a thematic basis, identifying where trends in the economy or across various industries may drive share price in the future, and looking to capture value as fashions shift.

Commenting on his current views, Phil True, fund manager of the CS UK Equity Alpha Fund, said:
"Our belief in the long term growth in the savings market means we are looking to invest in companies that are not dependent on dramatic growth in consumer spending. A third of our Fund is invested in 'defensive growth' names such as British Gas, which have limited exposure to any consumer slowdown. Similarly, 11% of the Fund is invested in 'infrastructure spend' plays such as British Aerospace, which rely on continued US and UK Government spending in health, education, defence and transport and are therefore not driven by the consumer. A further consequence of our view is our holding of stocks which can benefit from the savings trend. 12% of the Fund is invested in UK financial institutions such as Prudential, which should pick up this business as the UK consumer looks to put more savings aside for the future.

"For the UK market in general, we believe that equities look cheap when compared to bonds. However, low bond yields are indicating that growth is slowing, especially in the consumer sector, which results in some of the central themes in the CS UK Equity Alpha Fund. We are also seeing companies with balance sheets awash with cash and expect this to lead to more bids and deals this year as businesses look to exploit this position. We are positive on equities in the medium term and are expecting good if not spectacular returns from UK equity markets as a whole this year, bolstered by solid dividend growth."

When determining whether a theme is priced into a share, CSAM uses a variety of valuation metrics and also looks for signals of a maturing market theme, for example, increasing equity supply, directors selling shares, or share prices not reacting to positive information. CSAM believe this winning combination of value discipline and a non benchmark mentality has worked well and delivered value for investors.

The CS UK Equity Alpha Fund is available as a pooled pension fund and a sub-fund of the Credit Suisse Investor OEIC. Since launch on 5 April 2004, it has outperformed the FTSE All-Share Index by over 2.78%, producing a total return of 14.22% vs 11.44% from the Index. The Fund aims to hold between 40-70 stocks, has a tracking error of 4-7% and aims to outperform the FTSE All-Share Index by 2-3%. (Source: CSAM)


Please note that past performance is not a guide to future returns.