Liberty All-Star Equity Fund: Navigating Markets with a Balanced Approach

The Liberty All-Star Equity Fund (NYSE: USA) has released its January 2025 Monthly Update, providing insights into its investment strategy, sector allocations, and new holdings. The fund, which combines three value-style and two growth-style investment managers, aims to achieve long-term capital appreciation and current income by investing primarily in a diversified portfolio of equity securities.

Investment Strategy: Combining Value and Growth

The fund's investment strategy involves combining three value-style and two growth-style investment managers, each with a distinct capitalization focus. This approach allows the fund to benefit from the strengths of both value and growth investing. Value managers focus on identifying undervalued companies with strong fundamentals, while growth managers seek companies with innovative products or services and strong growth prospects. By combining these managers, the fund can participate in both value and growth opportunities while managing risk more effectively.

Sector Allocations: Information Technology and Financials

The fund's portfolio is heavily weighted in Information Technology (23.2%) and Financials (20.0%). These sectors are driven by growth and innovation in technology and the strength of the financial sector. The fund's investment managers likely believe that these sectors will continue to outperform the broader market and contribute positively to the fund's overall performance.

*Information Technology*: The Information Technology sector is represented by top holdings such as Microsoft (4.0%), NVIDIA (3.3%), and Alphabet (2.9%). These companies are at the forefront of technological advancements, such as cloud computing, AI, and semiconductor technology, which are expected to drive growth and innovation in the coming years.

*Financials*: The Financials sector includes companies like UnitedHealth Group (2.1%), Visa (1.9%), and Capital One Financial Corp. (1.6%). The financial sector has shown resilience and growth, particularly in areas such as healthcare, payments, and financial services. The fund's managers may be positioning the portfolio to capitalize on the ongoing strength and growth prospects of these companies.

New Holdings: Air Products & Chemicals

The fund added Air Products & Chemicals as a new holding during January 2025. This addition helps to diversify the fund's holdings across various sectors, reducing the impact of any single sector's performance on the overall portfolio. The fund's value-style investment managers likely identified Air Products & Chemicals as an undervalued opportunity, aligning with the fund's long-term perspective and risk management objectives.

Performance and Distributions

The fund's NAV increased from $6.95 to $7.09, achieving a 4.46% performance for the month, while the market price rose from $6.95 to $7.12, representing a 4.90% return. The fund distributed $0.17 per share on January 24th.

In conclusion, the Liberty All-Star Equity Fund's investment strategy of combining value and growth managers, overweight in Information Technology and Financials sectors, and addition of Air Products & Chemicals as a new holding, contribute to its long-term performance and risk management. The fund's balanced approach allows it to participate in various market conditions and potentially enhance its long-term performance.