It's what you sell that counts

The Fund Manager

Chris Murphy has an analytical approach to managing the Framlington UK Growth Trust, based on identifying the major economic themes that will allow UK-based companies to prosper. The style stems from science and his start on two major stockbrokers.

Chris Murphy has an analytical approach to managing the Framlington UK Growth Trust, based on identifying the major economic themes that will allow UK-based companies to prosper. The style stems from science and his start on two major stockbrokers.

"My background is as a physicist and I went straight from taking my degree to work for Shearson Lehman as an equity analyst, then to James Capel, also as an analyst," he says. "I was with each firm for two years or so and I've been with Framlington for seven."

Mr Murphy became a fund manager at Framlington. "As an equity analyst, I was focused on the water and electricity industries and I wanted to broaden my scope. As a manager, you are involved in identifying and developing invest- ment themes and structuring a portfolio to take account of them, selecting stocks which fit in with those themes."

Mr Murphy's believes the key theme for growth funds is the growth of global competition. "We are living in an increasingly competitive world with clear winners and clear losers. You will find your business is quickly gone if you can't offer the best price or the best delivery time.

"I look for companies which can add value for their customers, or ones in areas of the market experiencing a fundamental secular growth trend. Global competition means companies won't be able to grow their profits by increasing their prices. They either increase their sales volume or market share, or reduce their costs. We spend a lot of time looking for good-quality company management teams who can do this.

"And it's important when you are investing in a growing business that is growing that you don't fall in love with it.

"You have to continually reassess the businesses you are investing in, and you can't let yourself believe that just because a business has been growing for 10 years that it will continue to for ever."

This underlines a central principle of fund management, that the key to long-term performance is not so much what you buy as what you sell. But Mr Murphy says the most important element of his approach to running the UK Growth fund is to keep a constant watch on the whole portfolio.

"You hear people talk about the importance of the 'sell discipline'. It really is the 'buy-sell-hold discipline' that matters. You must know why all the stocks in your portfolio are there. Some businesses will provide steady results over time, and it is important to identify these as long-term holds, as well as assessing reasons for buying more aggressive growth stocks and selling them when they start to underperform.

"I would regard myself as an active manager and that means being prepared to make major changes in the portfolio if circumstances demand it. Take, for example, Rentokil Initial, one of the darlings of the market for a long time. Here was a company which set itself very high growth targets, which it achieved for a while, then missed its target by 2 per cent a couple of years ago.

"To us, that was a major flag that the business was no longer on an upward trend and, although it was one of our major holdings and had missed its target by only a small amount, we sold almost immediately.

"Lloyds TSB was another example. All through the Eighties, it was the model for the banking sector. More recently, it has been unable to sustain its performance. Although it was our largest bank holding, it had to go.

"And once you have identified a theme, you have to back it. When circumstances change, you also have to be prepared to move to the next one. For example, the fund has been very TMT (technology/media/telecoms) orientated. We cut those positions very aggressively in February when we thought they were grossly overvalued.

"We have moved into more defensive stocks, companies such as AMVESCAP in the financial services sector, an area which is showing strong secular growth, and some of the banks, such as HSBC and Standard Chartered.

"The financial sector has been strong since the summer, on the back of the agreed bid for Woolwich by Barclays, and telecommunications stocks have suffered. We have also been looking at the biotechnology sector for some of our more aggressive growth investments."

Mr Murphy says the TMT theme will almost certainly be back. "The shakeout we have seen in some areas of the market this year has been healthy. A lot of adjustment is needed to people's expectations of what growth rates should actually be, especially in the US.

"Once these have returned to more realistic levels, this will give us the opportunity to move back into TMT stocks."

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

News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
PROMOTED VIDEO
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
Life and Style
tech
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Sport
football
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
Sport
cyclingDisgraced cycling star says people will soon forgive his actions
News
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
people
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
music
News
i100
News
Lena Dunham posing for an official portrait at Sundance 2015
people
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
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

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea