Aug. 4 (Bloomberg) -- The oil leak in the Gulf of Mexico divided politicians and scientists on how to deal with the worst-ever accidental offshore spill. It also split managers of U.S. stocks more than 4,000 miles away in Scotland.
The Aegon American Equity fund, run from Edinburgh, has gone from placing in the top 10 of comparable funds to near the bottom because of its stake in Anadarko Petroleum Corp., the 20 percent owner of BP Plc’s crippled Macondo oil well. The rival Scottish Widows Investment Partnership North American fund and Martin Currie North American fund meanwhile climbed the rankings after benefiting from holdings of technology companies.
“It’s one of the trickiest years I can remember,” Ian Cooke, 55, who oversees $1.5 billion as head of North American equities at Aegon Asset Management in Edinburgh, said in an interview. “The oil services index fell 30 percent in May, and Anadarko was my biggest position.”
Money managers in Scotland have invested in the U.S. for centuries, yet few periods have been as turbulent for markets. In addition to the oil spill, investors are trying to take into account what Federal Reserve Chairman Ben Bernanke on July 21 called an “unusually uncertain” economic outlook.
The Standard & Poor’s 500 Index lost 7.5 percent between reaching a 19-month high on April 23 and Aug. 2.
“We’re seeing a huge amount of caution,” Tom Walker, 50, who oversees about $1.3 billion at Martin Currie Ltd., said at his office adjacent to Edinburgh Castle. “We’re not getting a huge steer for the second half or next year.”
Walker said he has about 27 percent of his fund invested in technology-related stocks, about eight percentage points more than their weighting in the S&P 500 Index.
The Martin Currie North American fund’s biggest holding is IBM Corp., the world’s largest computer-services company, followed by Apple Inc., maker of the iPhone and iPad. Cisco Systems Inc., the biggest networking-equipment maker, is the fund’s fourth-largest holding.
Walker had to cut his stakes in IBM and Apple after gains meant they hit self-imposed limits on how much he could own of the stocks. Apple jumped 57 percent in the year to July 31, while IBM is up 8.9 percent.
Simon Moss, 45, who runs the Scottish Widows Investment Partnership North American fund, has a similar bent toward technology stocks, including Skyworks Solutions Inc., a wireless semiconductor maker, and Riverbed Technology Inc., a maker of equipment that speeds up corporate networks. He also bought EMC Corp., the world’s biggest maker of storage computers.
Riverbed has surged 31 percent since Moss first bought shares on June 3, while Skyworks has jumped 43 percent.
“It feels to us we are in a new tech boom after 10 years of consolidation,” Moss, who oversees 6.3 billion pounds, said in an interview. “We’re trying to be reasonably open-minded. It’s a very fluid situation.”
The emphasis on technology stocks has helped the Martin Currie fund rank 7th of 89 similar U.K.-registered funds this year, according to Chicago-based research firm Morningstar Inc. It returned 4 percent in the first seven months, double the average return. Moss’s fund returned 3.2 percent, ranking 15th.
Before the blowout at BP’s Macondo oilfield, Cooke’s fund ranked 7th among 90 similar funds, up 14.3 percent over a period when the S&P 500 Index went up 8.3 percent. The Martin Currie fund ranked 46th and the SWIP fund 64th in the period.
The Aegon fund now rates 84th out of 89, down 3.4 percent in the first seven months of 2010. Over the last three months, it has been the worst performer, plunging 15 percent.
‘Too Much Risk’
“We also got caught out by having too much risk in the portfolio in May and June,” said Cooke. That was when the S&P 500 Index fell 13 percent.
The fund also had stakes in U.S. house builders, which suffered as construction of new homes weakened, he said. Housing starts fell 5 percent in June to an annual rate of 549,000, the slowest since October, Commerce Department data showed.
Cooke bought stocks including Stanley Black & Decker Inc., the largest U.S. tool maker, 3M Co., a maker of stethoscopes and sandpaper, and Philip Morris International Inc., the world’s No. 1 publicly traded tobacco company. Philip Morris rose 10 percent between June 24 and the end of July. 3M, which he purchased five days later, gained 11 percent by the end of last month.
Unlike his Edinburgh competitors, Cooke has less invested in technology stocks than the 19 percent weighting in the S&P 500 Index. He expects to buy some chipmakers later this year.
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