24th September 2015
James Mahon, co-manager of Elite Rated Church House Tenax Absolute Return Strategies
Church House Tenax Absolute Return Strategies is a multi-asset fund, which invests directly in assets, rather than using the fund of funds route. It targets positive returns over rolling 12-month periods and LIBOR +4% over rolling 3-year periods. Positive returns have been achieved in 92% of rolling 12-month periods over the past five years, with an average return of 7% and volatility of just 25% of that of the FTSE All Share index.
James Mahon, co-manager of Elite Rated Church House Tenax Absolute Return Strategies, came to our offices today to discuss the fund. Here's what he had to say:
“We'd been looking at absolute return strategies for a number of years, but it wasn't until a private client of ours sold his business in the summer of 2007 and asked us what he should do with the money, that we actually launched the fund. Key to this decision was the fact that he obviously didn't want to lose everything he had worked so hard to gain. So we developed a multi-asset fund, with an absolute return aim. We started with cash and worked our way up the risk spectrum, diversifying across enough different asset classes that could get positive returns with low volatility.
“Of course, in hindsight, this was great timing as markets plummeted shortly afterwards. When the stock markets fell 40-50%, our fund fell by around 4% before recovering. Admittedly, that's not a positive return in the very short term, but our client was thrilled! We've carried on from there, always with this client at the back of our minds when we are making investment decisions. He still invests with us today.
“We were very low risk going into the summer this year, which has paid off. Following the market falls, we have been bargain hunting, adding a little to credit and equities. Commodities have been hit very hard and while we haven't added to them yet, we are reviewing them. Oil is another option but, as an equity investor, I am always nervous of companies that are too reliant on an outside source, which these companies are. I'm not a fan of gold either, and haven't been for some time.
“With bonds no longer the low-risk asset they used to be, due to the strong possibility of interest rate rises, we are seeing more and more investors using our fund as an alternative way of 'calming down' their portfolio – to decrease their overall risk.
“As and when interest rates do go up, you would expect the returns on our fund to do so too. At the moment it is hard work getting positive returns, but it is achievable, and when rates rise, it is a sign that things are getting better.”
About James Mahon
James is the Chief Executive and Chief Investment Officer of Church House and was instrumental in its establishment in 1999. He co-manages the Texax Absolute Return Strategies fund with Jerry Wharton, who is a Director of Church House with a particular involvement in Fixed Interest. During his career James has worked in both the gilt market and as a professional investor in derivatives.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. James' views are his own and do not constitute financial advice
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