Ben Yearsley: Parsimonious McQuaker sees no reason to panic

The Analyst

Recently I have been blessed, if that is the right term, by visits from several multi-manager fund managers. One in particular doesn't get as many column inches as others, yet I believe he is worthy of mention. Bill McQuaker is head of multi manager at Henderson and his team (which includes the former New Star and Gartmore funds) currently has around £1.8bn in funds under management.

"Parsimonious" springs to mind when talking about Mr McQuaker. I am not saying he is a stereotypical Scotsman, but worrying about losing money on a certain position or investment is an important part of Henderson's process. That is not to say they don't take risks, they do, but in a controlled environment.

Rather than talking about a specific fund I thought it might be worth exploring Bill McQuaker's current view of the world. Turning the clock back six months, Mr McQuaker held the view that economic expansion would continue, which, mainly due to the European and US debt debacles, it hasn't. The team reversed their view at the end of July, believing the debt saga was affecting business and consumer confidence. This double header of debt and waning confidence means, in Bill McQuaker's opinion, western economies are at greater risk of slipping back into recession than at any time since January 2009. This led to a substantial repositioning of their portfolios. For example, within their more cautious fund the equity weight has fallen from 55 per cent to 40 per cent since mid-July. Not only has the weighting changed, but the composition of that 40 per cent as well. More has been invested with the likes of Neil Woodford, Adrian Frost, Nick Train and Angus Tulloch, ie more defensive managers. Overall, across the Henderson portfolios they are overweight in US and Japanese equities and underweight in Europe and the UK (marginally).

Similar to many fund managers, Bill McQuaker concedes being underweight in government bonds has been a mistake this year. The team have recently been buying some US treasuries and have bought other US dollar exposure through Thames River's Global Bond fund and the AXA Short Duration High Yield fund.

Looking at the wider picture again, Mr McQuaker expects the economy to deteriorate further over the short term. He is worried there is too much complacency in some emerging markets. He thinks India has an inflation problem, a weak currency and a deficit, twinned with growth problems, for example.

The elephant in Mr McQuaker's room, without falling into a cliché, remains euroland. The key question he asks is: what do the Europeans need to do to sort the problem out? I will preface his answer by saying he thinks there needs to be a faltering economy, market pressure and social disorder. He believes more, and larger, write-offs are needed, rather than the piecemeal offerings so far. He also thinks the ECB will start printing money and, interestingly, says it is legal for them to do so, if it is to keep inflation near their 2 per cent target. Finally, Germany, China and Japan have to start stimulating demand, similar to after the Asian crisis when the US effectively stepped in to stimulate global demand.

Bill McQuaker thinks this is an interesting time to be a fund manager and this is the hardest the team has worked in seven years! He suggests there is no need to panic or be trigger-happy when selling or buying investments. Instead he looks for warning signs, considering how to position the portfolio for certain events. He believes if turmoil does happen, ie the euro collapses, a great buying opportunity could ensue. Meantime he thinks equities remain cheap even if the economy slips into recession and that keeping it simple, ie buying Neil Woodford before buying UK gilts, is a sensible course of action.

The Henderson multi-manager team has the scale and resources to be among the market leaders. With Bill McQuaker (and Tony Lanning) they have excellent, under-rated managers at the helm.

Ben Yearsley is investment manager at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
    The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

    The ZX Spectrum is back

    The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
    Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

    Even the screenwriter pours scorn on Grace of Monaco biopic

    The critics had a field day after last year's premiere, but the savaging goes on
    Menstrual Hygiene Day: The strange ideas people used to believe about periods

    Menstrual Hygiene Day: The strange ideas people once had about periods

    If one was missed, vomiting blood was seen as a viable alternative
    The best work perks: From free travel cards to making dreams come true (really)

    The quirks of work perks

    From free travel cards to making dreams come true (really)
    Is bridge the latest twee pastime to get hip?

    Is bridge becoming hip?

    The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
    Long author-lists on research papers are threatening the academic work system

    The rise of 'hyperauthorship'

    Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
    The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

    The rise of Lego Clubs

    How toys are helping children struggling with social interaction to build better relationships
    5 best running glasses

    On your marks: 5 best running glasses

    Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
    Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

    'Ben Stokes gives everything – he’s rubbing off on us all'

    Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada