The Fund Manager: Schooled in the versatile arts of pension investments

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The Independent Online

There are many different ways in which fund managers get into their profession, but it is rare to find a manager who fixed on their career while they were still at school. Tom Nash, head of UK pension fund investments at Singer & Friedlander's Birmingham office, says his academic career was focused on investment management business.

"I did a degree in actuarial science," he says. "I can honestly say that, from the age of 15, all I wanted to be was an actuary involved in investment management. In fact, I started by investing my dad's redundancy money when he got the push from Rover."

Mr Nash started his professional investment management career soon after graduating and for the last 16 years he has been with Singer & Friedlander. "I was running small private-client portfolios, but I was more interested in running pension funds, because you don't have to worry about capital gains tax and I feel you can do a better job for your clients. So I gradually took over responsibility for more of the pension fund mandates."

Mr Nash is also responsible for one retail vehicle, the Singer & Friedlander Managed Fund, although this too was born out of his pension fund responsibilities. "All of the pension funds we were running were segregated funds and I felt we needed a pooled vehicle as well. So we launched a managed fund in 1994 and I didn't see why it should only open to institutional investors, so we made it a retail fund as well."

The result is a unit trust that offers private investors access to the same investment strategy and asset-allocation process as the group's institutional clients. "The investment policy follows from our monthly investment committee meeting, where our five most experienced investment managers, including myself, set out an overall strategy for our funds. We look at the major global market sectors, pharmaceuticals, chemicals, telecoms, banking and oils, and we form a view based on whether we want to be overweight, underweight or neutral in those sectors. So our core strategy is best described as 'top down' by geographical sector."

Mr Nash adds: "World equity markets suffered some of their worst periods of performance in a decade in the early part of this year, with the US experiencing its worst first quarter since 1978. Economic concerns have spread from being centred on North America and Japan to Europe, with consensus forecasts in the latter beginning to fall during the first quarter.

"As far as we are concerned, UK equities will always be a major part of the portfolio because this reflects the mix of pension fund assets. What we are doing is protecting our clients from shocks in the market. We are underweight in oils and pharmaceuticals, where we have had a very good couple of years. We are also underweight in telecoms and overweight in technology, which balance each other out."

The collective approach does not mean that the fund always gets it right. "It has been a very growth-orientated portfolio over the past year," says Mr Nash, "as we didn't anticipate the economic slowdown in the US last year and were caught out by that. But while the US economy may technically avoid a recession, a technical profits recession, which is defined as two consecutive quarters of negative growth, is likely. A historical look at US equity market trends, in the 12 months after a third consecutive interest rate cut, proves illuminating. On every occasion, except one, and that was the depression of the 1930s, US markets have risen by nearly 25 per cent on average."

The portfolio holds 60 per cent in UK equities, the remainder spread evenly across European, US and Asian equities, international bonds, UK gilts and sterling. The fund's largest holdings combine the familiar UK blue chips – Barclays, GlaxoSmithKline, Vodafone, HSBC Holdings and BPAmoco – with UK, US and French government bonds and a large holding in Singer & Friedlander's European fund.

FUNDAMENTAL FACTS

Fund manager:

Tom Nash Age: 43

Fund: Singer & Friedlander Managed Fund

Size of fund: £24.43m

Fund launched: February 1995

Manager of fund: Since launch

Current yield: 1.23%

Initial charge: 3.00%

Annual charge: 0.75%

Current bid/offer spread: 4.02%

Minimum investment: £5,000 (subsequently £1,000)

Minimum monthly savings: n/a

Standard & Poor's Rating (maximum *****): **

Fund performance to 25 June 2001 (Offer-to-bid, net income reinvested):

One year -15.54%

Two years -7.91%

Three years 2.42%

Five years 35.73%

Since launch 95.47%

Source : Standard & Poor's

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