Mark Dampier: Stick with Alpha Plus, despite short-term disappointment

The Analyst

It seems investors' patience runs very short nowadays. Too often they grow restless if they see their fund underperforming for a short period – even three or four months. Really you have to give fund managers more of a chance than this, particularly in markets dominated by political decisions, macroeconomic events and geopolitical risks.

It is virtually impossible to switch whole portfolios from one direction to another, and it is also very costly. Managers have to stick with their long-term strategy, so it pays to have some patience and assess a fund's performance over a longer period.

That said, an investor is entitled to be disappointed with lacklustre progress. One such fund for me is the Schroder Global Alpha Plus fund, which is run by Virginie Maisonneuve. Her high-conviction approach favours good-quality growth companies investing for the future. Despite many admirable aspects to the fund, performance has been poor over the last year, so I recently met with her to understand what has happened.

Her honest reply was to say that very little had gone wrong. Turnover has been low, and she has stuck rigidly to her process – a good sign. Quite often chopping and changing can be a road to ruin in fund management, and it usually tells you the fund manager has lost their nerve. While there have been a small number of stock-specific disappointments, what really seems to be driving underperformance is that the types of stocks she picks are not finding favour with the wider market. In short, her "style" is currently at odds with the prevailing mood.

To explain this it is necessary to look at the central themes of the fund. Ms Maisonneuve looks at the world as an increasingly interconnected "global village" and considers how companies are being confronted by trends that are continually shaping the world. These include climate change and the need to cut emissions; demographics and the resulting shift in demand likely to result from changing consumption patterns; and growing demand for commodities and natural resources. Clearly these are all long-term themes, and with many investors primarily looking at the next year – or even the next quarter – of company earnings, it is easy to understand that her longer-term outlook may not be shared by others.

Looking at the portfolio it is reassuring to find there is real quality. Apple and Google are two stocks that have fared particularly well, capitalising on the proliferation of mobile computing through devices such as smart phones and tablets. Ms Maisonneuve believes Google is good value and retains a 4 per cent exposure in the fund, while she has begun to trim her position in Apple following the stock's tremendous run. She believes we are approaching saturation in the mobile-phone market and while the tablet business offers further growth, profit margins are not as high.

Elsewhere, Home Depot, a US home-improvement retailer, has also been doing well. Property prices in the US seem to have bottomed and consumer confidence is picking up.

Other stocks, though, have not worked so well. Atlas Iron, an iron ore producer based in Western Australia, has been hit by the fear of a Chinese economic slowdown. Continuing urbanisation means iron ore inventories are actually quite low in China and Ms Maisonneuve expects a recovery in the share price. Similarly, Infineon Technology, a German semiconductor company, has struggled due to falling demand for its chips. The business is cyclical and she thinks better times lie ahead.

Herein lies the problem in my view. The market is more interested in defensive, high-yielding stocks than the higher growth companies Ms Maisonneuve is seeking out. Indeed, the fund has tended to perform particularly badly in "risk off" periods such as December last year and May and June this year. Yet these stocks have a latent value, and although they might be perceived as more risky, they could now be good value compared to the more fashionable defensive stocks with which investors are currently enamoured. Defensives may offer greater certainty of earnings but they have less scope for growth – a key ingredient for long-term returns. I suspect funds like this are due a return to form, though in a market dominated by the actions of central bankers and politicians I fear it may be some time coming.

Nonetheless, for investors with some patience, exposure to good-quality growth companies via a fund such as this should pay off over the long run.

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

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

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Business Development Executive - Affiliates & Partnerships

    £20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor