L&G duo stand by equities

Mr Thein said 2011 was the pair’s first year of underperformance for their three-strong £507m multi-manager suite of funds.

Since launch in April 2008, the £250m Multi-Manager Growth, £228.8m Multi-Manager Income Trust and £29.2m Multi-Manager Balanced trusts all rank in the first quartile of their peer groups.

However, the former two fell into the third quartile over one year to January 27 while the latter fell into the fourth quartile, according to Morningstar.

The manager said this came as the gold price rallied in 2011 by 10 per cent, but gold equities - which tend to be more volatile - fell by roughly 20 per cent in the year.

Mr Thein’s Growth fund has a 11.5 per cent weighting in gold equities, while Balanced has roughly 10 per cent and Income 9 per cent. The Investec Global Gold and Guinness Energy funds feature across all three mandates.

“If we are going to be high conviction, which we are, when we get it right we will really perform and if things go against us it will show in the numbers,” Mr Thein said.

“But we have tested our views on the asset class and still have the position. When gold equities had a bad time in December we bought more.”

Elsewhere, Mr Thein said being overweight emerging markets and Asia had also dented performance in 2011, but he did increase his weighting in the sector in December on the view the sell-off was unjustified.

“We thought the sell-off had been overdone as the positive structural growth story remains strong, particularly given consumers and governments are less indebted and inflation is now less of a concern,” he said.

Mr Thein said the overweight position to emerging markets and Asia had meant a “pretty strong start relative to the peer group” for 2012.

He highlighted Hexam’s £122.4m Global Emerging Markets fund run by Bryan Collings and Robin Geffen’s £451m Neptune Russia and Greater Russia fund as strong performers.

The manager has also introduced high yield into the Growth fund via the introduction of a 2 per cent position in the Nordea Global High Yield fund, a vehicle he already held in his other two mandates.

The addition of the Nordea fund in Growth came from reductions in his equity and alternatives weightings.

“Companies are cash rich and benefit from a benign default outlook,” he said. “What we believe we can get with high yield is equity-like returns with less volatility.”