Richard Troue: Patience is the key to Peirson's success
Friday 20 September 2013
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
- 1 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 2 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 3 Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
- 4 When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
- 5 Terror threat level raised to severe as PM warns Isis risk could last for decades
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
- < Previous
- Next >
iJobs Money & Business
£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...
£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...
£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...
£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...
Day In a Page
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
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony