Managed by Peter Askew and Elliot Farley, this £46m fund aims to provide a return of 3 per cent above UK inflation. Mr Askew explains: “We believe it is important to have an investment objective that investors can relate to. The process behind that revolves around seeking out asset classes that we can evaluate to deliver the desired outcome over a market cycle – three to five years. This provides a good investment discipline in that we don’t chase expensive asset classes just because they have done well.”
The fund was launched in May 2006 and its aim and investment process has gradually evolved, as Mr Askew points out: “It’s important not to remain static, as it is necessary to take account of changing factors such as demographics and central bank policies. Perhaps the most significant change has been our decision to alter the investment objective of the fund to reflect investors’ desire for a relevant outcome.”
Previously the fund’s primary aim was to outperform the Investment Association (IA) 20-60% Shares sector, but in 2015 the objective was changed to UK inflation plus 3 per cent, using the consumer prices index. “The investment process has evolved to greater reflect the importance of investment themes and factors over geographic boundaries,” the manager says.
Mr Askew notes the fund’s process takes account of where the managers believe economic output is in reality –as measured by GDP, unemployment, inflation and levels of savings – as well as where consensus thinking would have it, “as the latter is often misguided”.
He adds: “While we are not overly active investors, portfolio turnover will be influenced by the opportunities created by market over/under reactions. The investment process is structured to be proactive – trimming expensive assets while acquiring those that become undervalued. We are also conscious of the constraints of conventional investing based on geography and labels, preferring to incorporate important long-term themes, where a demand/supply imbalance favours the investor. The consequence of this is we allocate to thematic managers with the ability to cut across geographic boundaries. This also renders labels such as emerging markets less relevant.”
The fund’s institutional accumulation share class sits at a risk-reward level of four out of seven, with ongoing charges of 1.52 per cent, its key investor information document shows.
EXPERT VIEW - Oliver Stone, head of research, Fairstone Group |
This is a multi-asset vehicle run by the experienced pairing of Peter Askew and Elliot Farley since September 2013. The fund looks to outperform UK inflation plus 3 per cent a year and to achieve this by investing in a diversified portfolio of external managers, with a long-term focus on overarching global and regional themes. Since the managers came together, absolute and risk-adjusted returns versus the sector average have been strong, with a cumulative absolute outperformance of about 4.5 per cent, coupled with lower exhibited levels of volatility and maximum drawdown. With the fund still relatively small in size, this could be a good, nimble option for investors moving forward. |
For the five years to May 13 2016 the fund’s I-accumulation share class has delivered a strong 28.1 per cent compared with its sector’s average of 21.5 per cent, data from FE Analytics shows. The portfolio has also outperformed the sector average across one- and three-year periods.
Mr Askew says: “One of the aspects that we feel appeals to investors is our desire to limit the downside in periods of market stress, such as we’ve seen over the past year and most notably in the first six weeks of 2016. The past 12 months to the end of April has seen the fund decline by slightly less than one per cent. While this is better than the average for our IA sector peers, this hasn’t delivered our above-inflation goal. Limiting the downside can also lead to a slight underperformance versus our peers as markets rally as they did from mid-February.”
But on a longer-term horizon, the manager says the fund has “delivered on all fronts”, by outperforming the IA sector average and the UK inflation target. “We feel this is evidence of the strength of our approach and the value of selecting managers who are index-agnostic, conviction investors,” he says.
The manager notes “no single holding is the main driver of returns”, while recent activity has included adding to the fund’s exposure to gold as an alternative currency and also adding to “real assets”. He says: “Gold has been a good allocation for the fund over the past year, as have some assets with an implicit link to inflation, such as infrastructure and holdings that we would include in the real assets category. While our thematic approach has worked over time, there are periods when a particular theme hasn’t performed in line with expectations. These tend to be short term in nature but do provide an opportunity to re-evaluate our rationale.”
