Investments 

Tilney shuns all but 30 funds after shake-up

Tilney shuns all but 30 funds after shake-up

Wealth manager Tilney has shredded the number of funds it holds in the portfolios it manages for clients to around 30, down from 70 a year ago.

Chris Godding, chief investment officer at the firm, said the decision was taken due to the number of active managers who fail to justify their fees in returns to investors.

“As is well commented upon, it is difficult for active fund managers to outperform the market, and so not many do that," he said at an event in London today (9 January).

"Because not many do it, it is easy to spot the ones that do, so we have concentrated the assets into those portfolios.”

Mr Godding said having 70 funds in a portfolio mean it is relatively difficult to monitor all of them. He said when he worked as an equity fund manager he typically only had around 30 stocks in his portfolios.

He said a portfolio of 30 funds offers exposure to a very wide range of underlying stocks, and therefore a diversified exposure.

The reduction in the number of funds is also the result of Tilney merging with two other firms, Towry and Ingenious. Both of those firms had funds of their own in portfolios, and Mr Godding’s selection of 30 funds is the result of shrinking down the combined fund holdings of all three firms.

He said: “We are more focused on picking the best funds, rather than just picking a lot of funds.”

Mr Godding said Baillie Gifford Japan, and Axa Framlington UK Smaller Companies are among the holdings in the portfolios.

The chief investment officer said he takes a fairly strict approach to changes in a how a fund is run, saying he will sell out if the style is altered.

“We had one a couple of years ago. We were invested with a manager who said to us he didn’t make macro calls. Then when we spoke with him a year later, he had underperformed and we asked why.

"He told us it was because he had been positive on China. Well, that is a macro call and he said he doesn’t do macro calls, so we exited that fund.”

All of the funds in which the portfolios are invested are run by managers significantly invested in the mandates themselves, and all are concentrated portfolios, he added.

Adam Ross at Canaccord Genuity Wealth Management said fund managers deviating from the stated style of investing is a “red flag” for investors.

David.Thorpe@ft.com