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Tony Lanning arrived at Gartmore Investment Management last November, but only took full control of the multi-manager range on 1 April – April Fool’s Day, as he points out.

He has spent the past six months proving that the change of leadership was no joke. This has involved two fundamental changes in strategy. First, he has tried to align fund selection with the risk profile of each product. Previously, asset allocation varied across the range, but the fund holdings did not. Now the cautious fund is populated with defensive funds, while the high-alpha product contains more concentrated vehicles.

Second, Mr Lanning has embraced the multi-asset approach. “When I arrived the funds were invested in cash, equity and bonds, with a small property holding. We now own soft commodities, extension funds and multi-strategy hedge funds,” he says.

From 31 March to 23 September, the £305m Gartmore MultiManager Balanced fund fell 4.9 per cent, compared with losses of 5.8 per cent for the IMA Balanced Managed sector average, according to Lipper. Promisingly, this places it in the first quartile for this admittedly short period.

One of the first things he did in April was to cut any property exposure. “We still owned a bit of European property back in March. We have been particularly cautious on Europe, and I couldn’t see how Europe was going to decouple from what was going on in the US and UK,” he says. As a proxy for property and a move into multi-asset, Mr Lanning bought a Macquarie global infrastructure fund.

“Unlike many, this isn’t a play on global emerging markets. It’s much more like a bond product – it’s invested in oil and gas pipelines and toll roads.” He adds that it has the advantage over bonds of inflation-proofing. “If people are concerned about rising inflation, something like a toll road is very good hedge. If you take a road on the way to work, if they put up prices by a pound, you still pay it,” he explains.

Mr Lanning also used his new freedom to buy into the resources run. At one point, his soft commodities futures fund accounted for 7.5 per cent of the total portfolio. It has been reduced to 2 per cent and partly replaced with a broader, more defensive fund.

But his largest alternative allocation is to a closed-ended fund of hedge funds managed by Thames River. He describes this as a “long-term” holding: “It gives us exposure to areas we can’t necessarily get through long-only products, like distressed debt. It is good for sustainable diversification.”

Moreover, one of Mr Lanning’s largest UK equity holdings is the market-neutral £1.4bn BlackRock UK Absolute Alpha fund, which would take the weighting to hedge fund-like strategies to over 10 per cent. The manager cites it as one of the biggest contributors to positive returns over the past six months.

It is puzzling to see this highly defensive absolute returns fund alongside the £234m New Star Global Financials fund, which suggests a more conciliatory attitude towards the credit crisis. But according to Mr Lanning, this fund acts as a hedge against the other equity vehicles in the portfolio, which are underweight financials. “We were concerned that if there were a rally in financials we would miss it,” he says.

But he admits it has not been a huge success, as the manager has been too defensively positioned to benefit from any upsurge in investor sentiment. “When Fannie and Freddie were bailed out the fund didn’t participate fully in the rally, which was disappointing,” he says.

The more conventional portions of the portfolio have also been overhauled. “Since 31 March we’ve had a good look at the fixed-income weighting. This fund used to be very underweight in fixed income compared to its peers, and there were a number of bond funds with a high weighting in financials,” he says.

Mr Lanning has exchanged these for a number of sophisticated fixed income vehicles, including the £291m Artemis Strategic Bond fund, the £45m Investec Emerging Markets Debt fund and a global convertible bond fund run by Aviva.

“We have been very nervous about equity markets. We were keen to introduce convertibles because we see them as a defensive equity play rather than as aggressive fixed income,” he explains.

One of Mr Lanning’s more surprising equity bets is his 11.9 per cent weighting to US stock, mostly through Tom Walker’s £490m Martin Currie North America fund. The figure for the average fund in the IMA Balanced Managed sector is roughly 9 per cent.

“My view is that while I see plenty of headwinds for all equity markets going forward, the Federal Reserve has done much more to stimulate the US economy than the ECB in Europe. The action they have taken means it’s much more likely the US comes out recession more quickly. The ECB has been – probably quite rightly – focused on inflation, but that means Europe hasn’t benefited from any easing,” he says. At 8.2 per cent, compared to a sector average of 12, Europe is the manager’s largest underweight by some margin.

Mr Lanning holds no hopes of imminent recovery in the UK either. He has sold his last aggressive UK equity fund in favour of a uniformly defensive range. “We want to be exposed to large caps with strong balance sheets, strong brands and global earnings. We don’t believe in the ability of domestic companies to make money in this environment,” he explains.

Although the manager considers this kind of macroeconomic view essential, he attributes his performance largely to manager selection rather than asset allocation. “We have a view of what we think is happening in the world, but we spend far more time researching and meeting the underlying managers than on the top down,” he says, claiming the team sees over 500 managers a year.

But this granular research also feeds into the macro view. “In this environment, while markets are so difficult, it’s especially important to get a picture of what managers are thinking about the world,” he stresses.