Investing for the long term: A job for life

According to the Association of Investment Companies (AIC), more than half of investment companies, or trusts, have had the same fund manager at their helm for more than a decade*. Almost a quarter (23%*) have have had at least one of their managers in charge for 20 years or more.

Considering how many of us in other roles change jobs far more regularly, this is a surprisingly large percentage, and we were intrigued to find out whether it was the same case for open-ended funds too (funds which can sell an unlimited number of shares to investors, and so aren’t listed on a stock market).

We ran the data on the 3,864 funds available to UK investors**, and found that 752 have had the same manager in charge for 10 years or more**. This is less than 20%. And the number of managers who have stayed put for 20 years or more falls even more dramatically to just 2%**.

So why is this the case?

A spokesperson for the AIC said: “When it comes to investing for the long term, investment companies are an ideal vehicle for investors to consider. Their closed-ended structure means managers don’t have to worry about inflows and outflows of investors’ money. As a result, it’s perhaps unsurprising that investment company managers are in it for the long haul.

“It’s also worth mentioning that investment companies have a board of independent directors that oversee the management of the investment company and provide continuity, which may be another reason for long manager tenure. In some cases, managers haven’t always achieved their impressive long-term record with the same employer – while the manager has changed company, the board have been happy to move the investment trust with them.”

Here at FundCalibre, we do like fund managers – whether they run open-ended or closed-ended vehicles – with long-term track records, because it means they have experience of investing throughout all the different stages of a market cycle. The longer the track record, the better we can analyse the value they add with our proprietary screening tool, AlphaQuest, and we insist on a fund manager having a three-year track record as a bear minimum.

A job for life

The statistics speak for themselves: 75%*** of our 12 Elite Rated investment trusts have been run by the same manager for at least 10 years, and 17%*** for two decades or more, while 44.5%*** of our 137 open-ended funds have been headed up by the same manager for more than a decade and 6%*** for 20 years or more.

Below, we take a look at some of our longest-serving Elite Rated managers and the funds and trusts they run:

 

Investment trusts

James Henderson – Lowland Investment Company (28 years)

James has been at Lowland’s helm for more than 28 years, having managed the trust since 1990. James, alongside co-manager Laura Foll, looks for cheap and out-of-favour stocks, and are prepared to bide their time while waiting for good performance figures to come through.

Job Curtis – The City of London Investment Trust (26 years)

Job who, like James, works for Janus Henderson, has managed The City of London Investment Trust since July 1991. He has managed to increase the trust’s dividend payment every year for the last 51 years, and has done so through picking stocks which can grow their dividends while fending off any competition in their respective market areas.

James Anderson – Scottish Mortgage Investment Trust (18 years)

James has run Scottish Mortgage Investment Trust since April 2000. Now managing the trust alongside Tom Slater, the pair is unafraid to hold punchy positions in young stocks that are set to become disrupters within their industry; this means they tend to hold a significant number of technology stocks.

 

Open-ended funds

Sue Round – Edentree Amity UK (30 years)

Sue launched the fund back in 1988, making EdenTree Amity UK one of the longest-running ethical funds in existence. Ethics are central to the process, rather than just a bolt-on, and Sue tends to favour cheaply-valued stocks which have been overlooked by most investors.

Paul Causer – Invesco Perpetual Corporate Bond (23 years)

Paul, who works alongside co-manager Michael Matthews, focuses both on what is going on in the broader economy, alongside individual company fundamentals. When buying assets, the managers are completely unconstrained and can pick whichever type of debt they deem to be best-suited for the economic environment.

Stephen Kelly – AXA Framlington American Growth (20 years)

Stephen, who has been at the fund’s helm since July 1995, looks for companies that are at the forefront of innovation and change in their respective sectors. He and his team continuously screen for new opportunities and will only invest in companies which are ranking top in terms of sales growth, and are not cost-cutting or restructuring.

*Source: AIC, 19 June 2018

**Source: FE Analytics, 27 June 2018

***Source: FundCalibre, 27 June 2018

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.