Mark Dampier: New fund launch seeking to surf a wave of success
Saturday 07 July 2012
It is always intriguing to consider new fund launches. Fund management groups frequently launch funds to capitalise on an important theme, or harness the skills of an established fund management team. This new launch falls into the latter category. Fund managers Ben Leyland and John Wood have been running the JO Hambro UK Opportunities fund for more than five years, and with considerable success. It is up around 6 per cent over five years, over which time the FTSE All Share Index with dividends reinvested is down 3.1 per cent.
The UK fund's shorter-term performance is also good, and has certainly held up relatively well during periods where the markets fell. The managers attribute this to being realistic about the UK economy. They have always believed it was likely to perform poorly and retained a degree of cash in the portfolio – at present they have around 15 per cent.
With this new fund, they are being similarly cautious. Mr Wood uses a rather interesting analogy to describe markets currently: Imagine government's efforts to stimulate the global economy as waves in the ocean and global financial markets as surfers. The surfers wait to catch the next wave, whether it is more quantitative easing, interest rate cuts, or another attempt by the eurozone to resolve its problems. Each wave propels the surfers forward and everyone enjoys the ride. However, each fresh wave is weaker than the last and carries the surfers less far. Eventually, the sea will be largely flat and the surfers won't go anywhere. In other words, once stimulus ends stock markets could stagnate for a prolonged period.
Mr Leyland and Mr Wood suggest there is still the odd decent wave to catch. The strategy, they believe, is to be selective and search for companies that will thrive despite a difficult environment; ones with robust business models and a sustainable competitive advantage. By this, they mean companies that can consistently grow their market share, those that own or operate unique infrastructure upon which large amount of people are reliant, or which have products or franchises people trust and turn to again and again.
Within the fund, this translates to having a bias towards certain areas including technology, healthcare, industrials and consumer goods. Apple is a prime example but lesser-known firms may provide better investment opportunities. One is Sage, which provides accounting software to businesses.
The pair have about 17 per cent of the portfolio invested in healthcare companies. As well as exposure to UK-listed GlaxoSmithKline, they like Roche and Novartis. In the consumer sector, they like Belgian-listed Anheuser Busch InBev.
As a concentrated portfolio of between 25 and 40 stocks, the fund is likely to have considerably less in sectors such as energy, financial and utilities where the pair find it harder to identify companies that meet their quality criteria. They also have the flexibility to invest in small and medium-sized companies, so won't just be a blue-chip portfolio.
I admire Mr Leyland's and Mr Wood's approach of looking for robust, multinational businesses that can keep growing through thick and thin. While the managers are far from upbeat on the world economy, they see considerable scope for good-quality companies to thrive. This is often a mistake private investors make.
They are so caught up in the macro-economic environment they fail to see the opportunities and never actually bring themselves to invest. Good-quality companies will come through the worst of times stronger, so if you want a global fund that aims to pick out these long-term winners, this new launch could be of interest.
Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit www.h.l.co.uk/independent
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Emergency call 'started off dumb, but got pretty serious'
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
"History is violent," says the US Army tank commander Don "Wardaddy" Collier
Mark Dampier: Woodford’s young companies could be the stars of the future
You'll need £220,000 for a minimum wage in your retirement
Questions of Cash: Something rotten in the cellar causes trouble up above
Weekly Money: round-up of the personal finance stories you may have missed 20-24 October
Bank-beating exchange rates on your international payments
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village