Luckraft stands firm on small caps despite drag

George Luckraft is standing by a nearly 50% overweight position in small caps for his Axa Framlington funds, despite smaller companies dragging heavily on performance.

He argues managers taking big bets on large caps can be buffeted by large price swings. “In the mining sector, for example, you can be held hostage because of how much it moves about,” he says. His Axa Framlington UK Equity Income fund holds 6% in the mining sector, including 3.5% in Anglo Pacific, which he first bought at 30p in 2003. It yields 3.5% and trades at 250p, but had previously slumped from 230p to 100p before it rebounded, causing the fund to suffer. He says: “In miners there can be very big swings, and if miners are up 3% in a day, it can drive the market.” Luckr...