UK 

Buffettology manager urges advisers to become business analysts

 

Advisers should learn to be business analysts and "cut off" the noise from the stock markets, according to the manager of the UK Buffettology fund.

Keith Ashworth-Lord urged advisers to always be cognisant of the political and economic background in the UK.

"But the key thing is if you’re investing on a 10, or more, year horizon you really don’t want to be caught up in the noise of what is happening today.

"So I would say, always concentrate on the business, turn yourself into a business analyst who knows what he or she is looking for and just cut off this noise about stock markets and gossip and all the rest, because it really is just a distraction," he said.

Mr Ashworth-Lord runs the £259m fund along the lines of veteran investor Warren Buffett’s approach, also known as business perspective investing, with Sanford DeLand Asset Management having exclusive use of the Buffettology name.

But he admitted this left him with a narrow universe of UK companies to choose from for his portfolio.

"Typically, of the 2,000-2,500 companies that are quoted on the market or on Aim, we will only ever be interested in about 50 of those at any one time and maybe we have 30 of those in the portfolio already," he explained.

"What I’m afraid I’m telling you is there’s an awful lot of rubbish out there and you have to sort the wheat from the chaff very carefully."

Asked to explain what is business perspective investing, Mr Ashworth-Lord, said: "It’s the philosophy that when you buy a share in a company you’re actually buying a real economic interest in that business."

"We find that businesses with what Warren Buffett calls an economic moat - and what that means is they’ve got barriers to entry that’s keeping the competition off their lawn - we find that those businesses exhibit certain characteristics," he continued.

The manager acknowledged turnover in his portfolio was typically very low, although he pointed out it peaked last year at 7.2 per cent.

The reason for a higher turnover in 2017 was the takeover of one of his holdings and he sold out of two of his holdings, including Provident Financial, “both of which later had pretty horrendous profit warnings”.

Mr Ashworth-Lord is assisted on the fund by Rosemary Banyard, the former Schroders mid-cap manager, who joined Sanford DeLand Asset Management in 2016.

Over the past three years, the UK Buffetology fund has returned 71.4 per cent, compared to its sector, the IA UK All Companies, which returned 27.89 per cent.

Watch the full video interview with Mr Ashworth-Lord at the top of the page.

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