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Close Managed Income
Close Managed Income is a multi-manager fund aiming to provide capital growth and income by investing in both actively-managed funds and exchange traded funds. It sits on the conservative side of the risk spectrum, with preservation of capital a strong focus alongside income generation.
Our opinion
This is a steady offering with income generation at the centre of its process. The managers use the plentiful resources at their disposal from the wider group at Close Brothers to build their asset allocation. The fund is designed to be consistent in every way and this has fed through to performance. With the ability to diversify across numerous asset classes and geographies it could be considered a strong income solution for investors.
Company description
Close Brothers Asset Management is one of the UK’s largest providers of financial advice and investment management. The firm manage almost £12bn on behalf of private clients, families, professionals, business owners and charities.
The asset management arm is part of the wider Close Brothers Group. Formed in 1878, the firm is a UK merchant banking business providing lending, deposit taking, wealth management services and securities trading. The firm employs over 3,000 people and is one of the top 250 companies in the UK.
Fund manager
Matthew Stanesby joined Close Brothers in 2007 and heads up the manager research team which is responsible for the research, selection and monitoring of fund managers. He started his career in the actuarial and investment consulting world and worked within the life insurance, pensions and investment teams at Mercer and Aon.
James Davies is an investment manager and senior fund research specialist working within the managed and manager research teams. James began his investment career with Chartwell Group in 2003. From 2006 he headed up the firm’s fund research and in 2009 began managing their discretionary investment portfolios. In 2010 Chartwell was wholly acquired by Close Brothers.
Sam Grant Dalton joined Close Brothers in 2010. In addition to being a manager on the Close Managed funds, he also manages discretionary portfolios for the firm. Both James and Sam sit on the multi asset committee.
Team work makes the dream work…we all bring something different to the table and together deliver something much more than we’d be able to alone.
Matthew StanesbyFund manager
Investment process
The investment process behind building the Close managed portfolios is conducted in four stages. The first of these is strategic asset allocation, where the team works with independent consultant Moody’s to construct the multi-asset portfolio boundaries in terms of exposures to asset classes and geographies. This is done on a quarterly basis, with a formal review meeting taking place once a year. The quarterly meeting involves all 70 of the investment professionals at Close Brothers.
The second stage is tactical asset allocation, which feeds into the daily, weekly and monthly meetings the team has to discuss market movements. The tactical asset allocation meeting takes place on a monthly basis, with a person from each of the high net worth teams at Close attending – as well as the multi-asset managers. Asset allocation positions are formalised at this stage.
The third stage is fund selection, with the Managed Income fund having the ability to invest in third-party funds, as well as investment trusts and passives. This stage sees the managers adhere to the Four Ps process (people, philosophy, process and performance).
1. People – the team want to see firms attract and maintain talent; remunerate managers on assets and performance; and know how long teams have worked together
2. Philosophy – they are looking for investments with a clearly defined process that management have stuck to over time, as well as understanding what market inefficiency they are trying to exploit.
3. Process – the team want this to be robust and repeatable with no deviation, particularly in periods of underperformance.
4. Performance – they look for performance which is both consistent and easily explained. Importantly, they must have a track record of adding value over the long-term.
Once this is concluded the team builds a buy list of around 130 funds. They typically have around 400-500 meetings a year with managers.
The final stage is a weekly review of the portfolio to ensure it stays within its permitted investment boundaries.
ESG
ESG - Limited
Due to the fund-of-funds approach of this strategy, the managers are reliant on the ESG practices of others. They primarily use qualitative analysis and judgement when considering these practices and will always question their managers on their ESG approach, and how they integrate it into their process though there are no formal conditions. The managers want to be assured that the funds they invest in are prepared for long-term economic, social and environmental trends, and display good governance practices. The wider Close Brothers group is a signatory to the UN PRI.
Risk
The main risks for the Close Managed Income fund are focused around asset allocation and fund selection. However, while the managers have the flexibility to move away from the tactical asset allocation decisions made at group level, there is strong governance to oversee this. We believe the strength of the investment process should give investors’ confidence no stone has been left unturned in building the framework for the managers to meet their mandate. The multi-asset nature of the fund will also provide strong diversification. The slight value bias on the fund will mean the fund may lag in strong growth markets.
Read more about this fund
The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.