Equity Income  

Interview: Investec's Hutchins on keeping to his philosophy

While he was considered an “up-and-comer” at Threadneedle and likely to take on a big fund, he explains: “It was either wait for that or build something for myself, for ourselves. That’s what we’re trying to do. The quality team is still reasonably young, and the fund that’s been in existence for the longest is only 10 years [old].”

One of the highlights of Mr Hutchins’ career so far has therefore been the launch of the UK Equity Income fund in 2015. “Investec was one of the few large equity managers not to have a UK equity income fund when I joined. Being entrusted, supported and ultimately backed to manage that fund from scratch was a real draw,” he says.

More recently his role has expanded to include global equity income, joining Mr Rossouw and Abrie Pretorius on the Global Quality Equity Income fund in 2015. “I’ve always been very interested in global equity income as it’s a natural transition and I think there are multiple years of growth ahead in [the space],” he says. 

But he doesn’t have a “favourite” portfolio. Instead he highlights the differences between the two, with the global team taking a very “purist” approach to a portfolio of 30 to 40 of the best businesses that meet its characteristics. 

“We have a little bit more flexibility on the UK [fund]. We invest in around 40 to 45 companies and roughly two-thirds of that are based on pure quality. But we also have a proportion of the fund that is looking for change situations,” he says. 

“The UK has that extra element where we’re looking for these slightly contrarian change ideas, albeit through companies that are ultimately good quality – so the variety the UK brings is quite exciting.” 

While he clearly enjoys his wider role, Mr Hutchins acknowledges being an equity income investor includes responding to market challenges, such as the global financial crisis. “Just being a sponge and soaking up those times was very important and it has held me in good stead. Those days in the credit crisis, when you literally didn’t know if companies were going to survive, were very instrumental and very challenging,” he recalls.

He highlights the markets in 2016 as a different kind of challenge. His fund was among the top-performing vehicles following the EU referendum “through no skill of my own”, he says, adding: “We invest in solid and dependable businesses that come to the fore in very difficult markets.” 

But three months later the companies that had been in vogue were being sold off seemingly, regardless of fundamentals and underlying performance. “Those are the challenges I quite enjoy. The psychological test that gives you and the reaction to this volatility is really important. You learn things about your colleagues, about other investors and about yourself in these markets.”