Being 'unique' should be beneficial for investors

Being 'unique' should be beneficial for investors

Being unique should be beneficial in the long-run when it comes to investment funds, Peter Walls has said.

The manager of the £133m Unicorn Mastertrust said he liked "unusual, unique investment trusts", which is reflected in the holdings within his portfolio of investment trusts.

Speaking to FTAdviser, Walls said the "vast majority" of the master trust's holdings can be described as "pretty unique".

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He explained that although some unique investments have fallen by the wayside - such as Neil Woodford's former Patient Capital Trust - good trust managers with long track records are able to provide the sort of growth he looks for.

FTAdviser: Can you give examples of unusual trusts that you have added to your portfolio?

Peter Walls: The vast majority of Mastertrust’s holdings can be described as pretty unique, we like investment trusts that take advantage of the benefits of the investment company structure, primarily the luxury provided by a permanent pool of capital to invest for the long term in less liquid assets.

Consequently we have a bias towards smaller companies trusts (those invested in both the UK and overseas) and listed private equity trusts. Each of these areas have demonstrated superior long-term performance (after costs) relative to large public market quoted equities.

Smaller companies trusts we hold include BlackRock Throgmorton and Gresham House Strategic in the UK and JPM European Discovery and Atlantis Japan Growth overseas. LPE holdings include Oakley Capital Investments, Harbourvest, ICG Enterpise and Standard Life PE.

We also favour specialists like Herald, with a strong long-term record achieved by Katie Potts in an area largely deserted by UK institutional investors; North Atlantic Smaller Companies, successfully managed by Christopher Mills over decades with significant skin in the game – another attribute we like; and Hipgnosis Songs Fund, which has strong positive tailwinds from music streaming and the return to live performances.

FTA: How popular is 'being different' in terms of market behaviour? Is doing something unique more beneficial than doing something 'safe'?

PW: We believe in the words of Howard Marks (you can’t do the same thing as others do and expect to outperform) and Sir John Templeton (if you want to have better performance than the crowd, you must do things differently from the crowd).

Clearly some unique strategies will suffer bouts of sustained underperformance and some may fail altogether (Woodford alert) but on average 'unique' should be beneficial.

FTA: What sort of qualities do you look for in an investment trust when you monitor the market? What does the manager have to do in order for you to make room in your portfolio for him or her?

PW: Past performance is the primary consideration but this has to be viewed in the context of the asset class in which the manager specialises.