Waverton Multi-Asset Income

This fund draws upon the wider abilities of Waverton Investment Management to build a multi-asset portfolio of direct equities, fixed income and alternative strategies. The team places risk at the centre of the investment process by focusing on protecting capital in weak markets.

Our opinion

A strong performer since its launch in 2014, we like the collegiate approach behind the design of this fund, as well as the focus on managing downside risk. The fund seeks to achieve capital growth in-line with or ahead of inflation (targeting CPI +2.5% over the long-term) and provide a consistent and sustainable dividend. As a global multi-asset fund, it uses a number of asset classes for true diversification. The team is also experienced in the alternatives space, preferring to invest in real assets like infrastructure and renewables, all of which offer returns which are linked to inflation.

Company description

Established in 1986 as J O Hambro Investment Management, the company was renamed Waverton Investment Management in 2014 and 37.5% of the company is owned by its employees. The company now manages £5.6 billion on behalf of institutions, private clients and charities. Waverton funds is a specialist unit within Waverton Investment Management and describes itself as a big boutique.

Small teams are given the freedom to implement their own strategies whilst still being supported by the infrastructure of the wider group. Managers interests are aligned with their investors as they are invested in their own strategies. Funds are deliberately capacity-constrained to prevent them from becoming too large.

Fund manager

James Mee joined the company in January 2013. He is co-head of multi-asset strategies at Waverton, managing the Income, Growth and Portfolio funds. James is also co-manager of the Protection Strategy and is part of the team which runs the firm’s managed portfolio services. He is also a member of the Asset Allocation and Institutional Stock Selection Committees, and a trustee on the Waverton Pension Scheme.

James is joined by assistant manager Matthew Parkinson, who joined Waverton in 2019 to focus on multi-asset research - principally providing ideas for the Waverton Real Assets and Absolute Return fund. He became an assistant manager in 2021. Prior to Waverton, Matthew worked at Janus Henderson as a multi-asset analyst.

James MeeFund manager

Investment process

The philosophy and process of this fund is focused around the management of risk. The team does not define risk as volatility – but instead sees it as underperforming inflation over the longer-term and permanent capital loss.

The team meets these challenges by focusing on equities and real assets, which can drive capital growth over the long-term; and by diversifying not only across asset class, region, sector, style, duration, credit quality and currency - but also by employing hedging strategies to protect against certain outcomes.

The team taps into the experience of the wider group to invest in equities, bonds and alternatives to build a portfolio of 80-100 individual securities for the fund. The fund does not have a specific income requirement – so everything in the portfolio does not have to offer a yield. As a result, the yield on the equities side of the portfolio is relatively low in comparison to the fixed income and alternatives allocation.

The fund has held around 20-25% in alternatives since launch. The majority of this is held in real assets – the likes of property, infrastructure, commodities and specialist lending. This is because these assets are either explicitly or implicitly linked to inflation

The fund looks to achieve a consistent and sustainable income (as opposed to maximising yield or offering a specific income), this is because the team wants to be comfortable with the risk it is taking to achieve this yield. The yield has typically been around the 3-3.5% mark and is paid on a quarterly basis.

ESG

ESG - Integrated
The team believes responsible investing forms part of its fiduciary responsibility to investors and stakeholders. The team focuses on engagement with companies rather than employing an exclusion/divestment strategy.

The management team also believes that if you are doing your research properly you are already covering the environmental, social and governance issues of any business – this covers the likes of poor data quality; inconsistent third party ESG ratings; and finding companies that can successfully adapt to ESG opportunities and risks.

Risk

This fund employs a hedging strategy to help protect the portfolio in acute periods of market stress. Using derivatives can involve a higher level of risk, however, the team is experienced in this space and taps into its own Protection Strategy, for which James is also a co-manager.

Changes in exchange rates may impact the value or price of an income investment, while fixed income securities may be sensitive to interest rate changes (duration) and will increase and decrease in value as interest rates change.

The fund does have a number of risk management controls, beyond the diversification of assets. There are four monitoring & reporting and oversight committees to make sure the fund is meeting its objectives. The nature of the portfolio is designed to protect investors from downside risk.

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Read more about this fund

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