Finding diversified income streams for your ISA
There is a common misconception that income investing is just for those at or approaching retirem...
Two fund-of funds giants announced their retirements last week. Bambos Hambi and Gary Potter – both with decades of experience and numerous multi-manager franchises to their names – have announced that they will step down from their roles at the end of 2021 and the end of Q1 2022 respectively.
“There are very few fund managers who can say they’ve built three fund of fund businesses into billion pound franchises during their career,” said Darius McDermott, managing director of FundCalibre.
“But that is exactly what Gary Potter has done alongside Robert Burdett in the past 25 years. After taking the fund of funds business at Rothschild from £110m to more than £1bn, the pair then built a market-leading franchise from scratch at both Credit Suisse Asset Management and Thames River, with the latter subsequently being bought by BMO (then F&C) back in 2010.
“The fact they have managed to achieve such success is testament to their long-term performance through numerous market cycles – you do not build numerous fund of fund franchises with a strong adviser and retail following without it.”
Quilter is also on the hunt for a new chief investment officer for its multi-asset business, as Bambos Hambi is retiring.
Bambos is the former head of Standard Life Investment’s MyFolio range and joined Quilter in November last year. Having been in the industry for more than 30 years, he has decided to retire due to changing personal circumstances and to spend more time with his family.
With such big changes afoot, where should investors be placing their money?
Here are three rising stars and three experienced alternatives.
This is a steady offering which invests 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. 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. It has been managed by co-managers James Davies, Matthew Stanesby and Sam Grant-Dalton since November 2014.
This fund sits in the Investment Association Flexible sector, which means the manager is afforded a significant degree of discretion over asset allocation. It invests in around 30-60 underlying funds and investment trusts, with a preference for out-of-favour areas. Turnover of underlying funds in the portfolio tends to be very low. We like the team’s straightforward process and focus on managers with a simple, yet disciplined investment process. It has been managed by co-manager Vincent Ropers since April 2017 and co-manager Philip Matthews since September 2018.
This fund aims to produce a high level of regular income, with the prospect of preserving the real value of capital over the long term. The managers, who adopt a value-focused style, have the flexibility to invest across all asset classes. It is well-diversified with a common-sense investment process. Income is paid monthly. Richard Parfect is the longest standing co-manager have run the fund since July 2010. He was joined by co-managers Tom Delic and Mark Wright in June 2011 and Gary Moglione in April 2018.
This fund aims to pay a monthly income and invests across a broad range of asset classes and holdings. The team makes decisions centred around a three-stage process. The first stage is asset allocation, where they discuss asset class valuations and macro issues. The second stage is fund selection, with the aim of having a final portfolio with a stable of funds that are not too closely correlated. The third stage is active management. Lead manager David Hambridge was part of the original team that set up the company’s fund of funds in 1995. Ian Rees joined the team in 2005. Simon Evan-Cook and David Thornton joined in 2006.
Jupiter runs a suite of funds under the Merlin label. These funds, which have different investment objectives, are predominantly funds of funds, managed by a very experienced team of multi-manager professionals. As the investment philosophy and style is broadly the same across the Merlin range, there are many holdings that overlap. However, the exposure is tailored in each fund to reflect the different investment objectives and risk tolerance. John Chatfeild-Roberts Has headed up the Merlin range since 2002. He has since been joined by co-managers Algy Smith-Maxwell, Amanda Sillars, David Lewis, Alastair Irvine and George Fox.
This fund aims to produce consistent income distributions and long-term capital preservation. The team will invest up to in 60% equities and at least 30% in fixed income, non-equity and cash, targeting a yield in the top 10% of income generators in the sector. While Gary Potter will be a loss to the business, co-manager Rob Burdett built three fund of fund franchises with him and has managed this fund since 2014. We remain confident in Rob and his eight-strong team at BMO, many of whom are senior partners in the business, and a number of whom have spent 15 or so years in the team. The fund remains Elite Rated.