What we can learn from investing through the decades
In a world of constant change, stability can be comforting thing – especially when it comes to our...
One of the unforeseen consequences of marrying a Fijian has been that I’ve had to learn to a) understand and b) love rugby. But the past two weeks have been more rugby-orientated than most.
First, I spent 15 hours and 44 minutes in a queue of 87,464 people, in an attempt to get tickets to the Rugby World Cup in Japan later this year. Yes, those numbers are correct and no, I wasn’t successful (don’t get me started).
Then I was serenaded* by Olympic Gold Medallist, Fijian International and Harlequin’s rugby player Semi ‘Beast’ Kunatani.
And, finally, this coming weekend will be dominated by the start of the Six Nations on the TV.
With all the talk at home of who might win what tournament**, I thought it might be fun to bring some of my new-found knowledge into the investment arena. So here is our ‘Investment 1st XV’:
Maybe not spectacular to watch, but rock-steady and reliable – props are a key part of the team and do much of the hard work.
Janus Henderson UK Absolute Return and Smith & Williamson Enterprise fit nicely into these positions. While they won’t race off in really strong markets, they have the ability to make money from rising and falling stock prices, and all with far lower volatility than a UK equity fund.
A hooker is similar to the props, but has a more specialist role. He’ll throw the ball in at the line-out and in the scrum, he’ll hook the ball back to the team.
Premier Defensive Growth is an absolute return fund with a difference. It seeks to deliver a consistent positive return in all market conditions by investing in a portfolio of assets that offer a predictable return over a defined period of time.
One’s the line-out ‘catcher’ the other is the massive chap who picks him up: the solid, dependable unit.
The former invests in holdings falling into one of four buckets: steady, compounders, accelerated or event-driven. The managers will flex these buckets according to where they find ideas and they are more likely to have conviction in individual bonds than in a particular credit quality band of the market.
The latter has a manager who has has proved adept at delving into parts of the fixed income market where others fear to tread. His process is risk aware and concentrates on avoiding losers rather than picking big winners.
Been brought down in a tackle? The opposition has possession? Don’t worry. The flankers are there to win the ball back.
The same can be said for strategic bond funds which can reposition, depending on the market circumstances and get better positioned.
The team at TwentyFour have a highly flexible approach that enables them to take advantage of prevailing market conditions as they change over time. Their specialist skills mean that they can, and do, invest in areas of the market that others avoid, such as subordinated financial debt and asset-backed securities.
M&G Optimal Income has the highly experience Richard Woolnough at the helm. This ‘go-anywhere’ fund has a flexible mandate, which enables the manager to shift the interest rate exposure and to invest across the credit spectrum. The fund can, and often does, invest in equities and also derivatives.
I feel sad about the lack of creativity in the name for this player, but they have an important role as the link between the fronts and the backs. An all-rounder, there to create balance.
Managed by well-known contrarian investor Alistair Mundy, Investec Cautious Managed invests mainly in equities and bonds, but can also hold gold and cash. The intention is for the equity portion to drive the long-term performance, while the fixed income portion reduces volatility – so good in attack and defense.
Small and nimble, this distributor of the ball looks for weakness in the opposition to then make big gains.
Managed by veteran investor Charles Montanaro and a specialist small-cap team, Montanaro UK Income invests entirely in quality mid- and small-cap stocks, many of which are niche businesses in growing markets.
Your points-scoring play-maker – often a star player who kicks home important scores from conversions and penalties – a player that often bails the team out in times of difficulty.
Man GLG UK Income has a unique and disciplined investment approach which is applied with skill and pragmatism. The manager can invest in UK companies of any size, as well as having the ability to invest up to 20% in European equities or bonds if he feels the risk/reward characteristics are more favourable. It has a current yield of 4.23%. Dan Carter eat your heart out.
Fast and flashy and sometimes a bit of a show off, this player may be the glory hunter – but can sometimes score an amazing try.
As manager of AXA Framlington Global Technology, Jeremy Gleeson, says: “Technology breakthroughs aren’t always anticipated, which makes the sector all the more exacting to invest in.” An unconstrained multi-cap fund that seeks growth from technology stocks from around the world, the lack of constraints for this fund means it is free to invest in ‘new technology’ rather than ‘old commodity’ companies.
This player can be equally as fast and flashy, but plays on a less popular side. There is also the danger that they can be flattened by their opposite number. However, over their career, they are likely to score many points.
Unloved Asian equities seem perfect for this role. Unpopular at the moment, they have, however, proven to be very profitable over the long term as they capture the exciting growth opportunities in the region. Schroder Asian Alpha Plus has a highly experienced manager who is able to utilise Schroder’s vast analyst resource in the area. He has a flexible mandate with few formal constraints, but the fund will typically have a bias towards larger companies.
For this player, going forward is just as important as going back. Fast and powerful he will have tactical astuteness. An Inside Centre will direct play, be fast and create space.
Fidelity Global Special Situations‘ manager Jeremy Podger targets three categories of investments – each with unique drivers and characteristics – that work together to create a stylistically balanced and flexible portfolio.
Similar to the Inside Centre but a bit faster again and more attack minded. This player exploits space created by their team-mates.
Based around the company’s powerful screening tool ‘Matrix’, SLI Global Smaller Companies fund identifies smaller companies from all around the globe – including emerging markets – that the managers believe to have the best growth prospects. It has a bias towards growth sectors and tends to avoid cyclical industries like energy and materials.
Finally, versatile and good with his hands as well as his feet, the Full Back is great for putting right any errors from the team and getting them out of trouble.
Guinness Global Equity Income has a ‘one-in, one-out’ philosophy, which means the fund stays up to date with the managers’ best ideas, because they have to consider the worst of their investments, rather than simply adding a position. A core global holding it has 35 equally-weighted stocks.
*When I say ‘serenaded’, both he and my husband were playing guitar and singing – I just happened to be in the same room. But that doesn’t sound as good.
**For those of you who like to make the odd wager, the answer to the question: Can Fiji beat Wales (in what could be a deciding match in pool D)? “Yes”. With a very confident nod of the head.