Richard Troue: Patience is the key to Peirson's success

The Analyst

Investing is a marathon not a sprint and an investment portfolio is only as strong as its core holdings. These should be chosen with a view to holding them for the long term, in the expectation they will provide support and stability through the tough times, and consistent growth during the good times.

The key to achieving this is to strike a balance between growth and diversification. Investments need to deliver enough growth to perform well when stock markets are rising. During tougher times diversification can spread risk and help limit any falls in value.

Adding value slowly, incrementally and regularly can add up to attractive returns over the long term. It might not be the most exciting way to invest, and performance might look pedestrian at times, but patience is the key. Steady returns are exactly what you want from a core holding. It takes great skill and discipline to manage a fund in this manner. Richard Peirson, manager of the AXA Framlington Managed Balanced Fund, has done so successfully for almost 20 years.

Mr Peirson has a simple strategy. He tends to invest between 75 per cent and 80 per cent of the portfolio in shares, with the rest in cash and government bonds.

The latter are used to provide balance to the equity holdings and reduce the volatility of the portfolio. Presently around 13 per cent of the fund is held in cash, with 10 per cent in government bonds.

He then aims to add as much value as possible through his equity holdings while maintaining a portfolio which is diversified across different countries, sectors and across companies of various sizes. He is responsible for the UK portion of the portfolio and with the outlook for economic growth improving, Mr Peirson believes this should be positive for corporate earnings over the course of 2013 and into 2014.

The backbone of the portfolio remains in large businesses with overseas earnings, such as HSBC, BP and GlaxoSmithKline. He has also been holding positions in house builders such as Barratt Developments, Persimmon, Bovis Homes and Crest Nicholson. The expensive land bought by the developers in 2007 is now falling out of their inventories, with cheaper land creeping in which should have a positive impact on profit margins. Performance here has been strong and some positions reduced as a result.

For the overseas portion of the portfolio, considerable input comes from AXA Framlington's experienced global team. Stephen Kelly, for example, picks the US stocks; Mark Hargreaves is the team's European stock picker; and Chisako Hardie provides the expertise in Japan.

Presently, almost half of the portfolio is invested in UK equities, with approximately 13 per cent in each of the US and Europe; 4 per cent in Japan; and 6 per cent in Asia and emerging markets.

Encouragingly, Mr Peirson suggests stock picking has been strong across the board recently with the exception of the US, where Stephen Kelly's style of seeking companies capable of strong growth and the ability to become much larger has not been in favour, although there has been some improvement of late. At the sector level, financial companies have performed well while resources companies have generally struggled as slow growth in China and emerging markets impacted the outlook for commodity prices.

Overall, our analysis suggests good stock picking has been a key driver of performance, while Mr Peirson's country and asset-allocation decisions have also contributed. He has outperformed the average fund in the sector in each of the past 10 years.

This consistency has added up to an impressive performance record with the fund delivering growth of 148 per cent over the past 10 years compared with 86 per cent for the sector average.

Fund management is awash with star names, but a closer look reveals unsung greats like Mr Peirson who are just as capable of outperformance.

He has built an exemplary track record of delivering consistent returns for investors in a variety of stock-market conditions.

I believe this fund could make an ideal long-term holding for virtually any individual savings account or self-invested personal pension portfolio.

Richard Troue is an Investment Analyst at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit www.hl.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
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

    Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

    £350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

    Java Developer - Banking - London - Up to £560/day

    £500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

    HR Business Analyst, Bristol, £350-400pd

    £350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Account Manager - (Product & Account Management, Marketing)

    £26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

    Day In a Page

    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz
    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on