Mark Dampier: My money's in safe hands with William

The Analyst

These days I doubt many investors will recognise the name William Littlewood, but in the UK he was the star fund manager of the 1990s. He's also probably the best fund manager I have ever met.

To give you some background, he first came to my notice in 1991 when he managed what was then a small income fund from a virtually unknown group called Jupiter. Over the next nine years the Jupiter Income Fund produced a return of 580 per cent, compared with 266 per cent for the sector average. Even Neil Woodford, today's best-known fund manager and still a big favourite of mine, couldn't match that and delivered 342 per cent over the same period.

Mr Littlewood left Jupiter at the end of 1999 and for a while I thought his talents had been lost to the fund management industry. However, four years ago he resurfaced at Artemis running a very small hedge fund, mostly of his own money although I did invest a little of my own in it too. He got off to a bad start but the portfolio recovered well and over about three years he still made me money during tough market conditions.

I am therefore delighted to see that he has now come back to the retail market with Artemis Strategic Assets Fund. Its highly flexible structure allows Mr Littlewood to harness his experience as both a brilliant long-only manager and as a hedge manager too. I also think this is the perfect time for a fund that can go anywhere in search of the best returns.

Right now asset allocation is a nightmare. Assets that may be good for the next six months will not necessarily be good for the next five years. In other words, the philosophy of buying and holding for the long term seems under threat.

In this new fund Mr Littlewood will invest in a wide array of assets encompassing shares, bonds, commodities, cash and currencies. The extra nuance on this fund is that he will also be able to go short, giving him the ability to make money when prices fall.

At present Mr Littlewood's views are not that dissimilar to Neil Woodford's of Invesco Perpetual, in that he thinks the recession will last longer and will be deeper than anything that we can remember. Conversely, when a recovery does come, Mr Littlewood thinks it will be sharp and quick – and those left holding defensive assets could be left behind. This fund gives him the flexibility to make that switch to a more aggressive portfolio when he feels the time is right.

For now the fund will have roughly 35 per cent of its money in UK and international equities and 15 per cent in commodities, with gold at 7 per cent being the largest weighting. Twenty-five per cent will be made up in currencies, including a long position in Canadian dollars.

Perhaps more interestingly he believes that government bonds are an accident waiting to happen and he will be 20 per cent short of UK and US gilts. The fund will start with about 45 per cent in cash, which is a defensive position but also gives him the liquidity to suddenly pounce on an asset class as opportunities develop.

Clearly the fund will have a degree of short-term volatility and it won't necessarily behave in a similar way to the general stock market. However, I am strongly of the view that the fund is ideally suited to today's more difficult environment. I am also convinced of William Littlewood's ability and pleased that he is working at one of the UK's top investment houses at Artemis.

Finally, very welcome indeed, is the fact that the fund comes with a straightforward annual management charge of 1.5 per cent. This means that there are no performance fees, which in many cases verge on the extortionate.

In my view this is the fund launch of the year and I will be backing it strongly.

Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information 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

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