The job that fits him to a tea

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The Independent Online

From teaboy to trust manager Nick Greenwood fell into the job by accident. "I started in stockbroking in 1979, after a local firm of stockbrokers wrote to the school in Exeter where I was, looking for a tea-boy. I asked a friend what a stockbroker was and was told they were like accountants, only more boring."

From teaboy to trust manager Nick Greenwood fell into the job by accident. "I started in stockbroking in 1979, after a local firm of stockbrokers wrote to the school in Exeter where I was, looking for a tea-boy. I asked a friend what a stockbroker was and was told they were like accountants, only more boring."

Mr Greenwood took the job, with Christows, and stayed. "The idea was that it would be a holiday job before I went to university. I never went to university."

Fund management came in 1995 when Christows expanded from Exeter and Bournemouth to London, with Mr Greenwood on its City team. "The idea was to provide research on companies from the South-west, but that never took off. But we set up several funds in investment trust shares and I became involved in the management."

The Christows funds were part of an Open-Ended Investment Company (OEIC), similar to a unit trust, except that it is structured as a single company containing specialist sub-funds and quotes a single price for buying and selling. The Christows OEIC, called Christows Investments plc, has four sub-funds, a UK equity fund managed from Exeter, and three portfolios based on investment trusts, which Mr Greenwood manages.

"In the spring of 1995 investment trusts were flavour of the month, trading at narrow discounts or even at a premium, just at the wrong time to start up such funds. I have been responsible for the management since 1997, although I have been involved in the research, the legwork, since the beginning."

Mr Greenwood places a lot of emphasis on this legwork. "Investment trusts are traded on perception but the reality can be very different and that is where value lies. If, for example, you were a smaller company fund manager you would spend a lot of time going out and meeting smaller company management teams and 'kicking the tyres'. With investment trust portfolios, you spend a lot of time meeting the individuals who run the trusts and seeing what they are up to."

Christows Investments plc is listed in Dublin. That was expedient. "We started in 1995 and there were no OEICs in the UK at that time - legislation to allow them came later. The OEIC was a new idea and investors like new ideas. There is no reason why it couldn't be a unit trust - most of our competitors are unit trusts - although now OEICs seem to be taking over."

Mr Greenwood's three funds include an overseas portfolio (which excludes investment trusts which invest in the UK), a more diversified global fund and an Accelerated Growth Portfolio.

"They are based on portfolios of investment trust shares, although they are allowed to have up to 5 per cent in open-ended funds. We use these when we want to go with the consensus in a particular area.

"This is the case with Europe, where most investment trusts are on low discounts or premiums to net asset value. If the markets go up 15 per cent but the discounts widen to 10 per cent you have given up a lot of that gain. Our stock selection is mainly 'bottom-up', so we are not worried if we have two similar funds in the portfolio."

The difference between"bottom-up" investment, choosing individual shares on merit, and "top-down", deciding on markets and sectors that look attractive then finding shares within them, shows how Mr Greenwood manages his funds.

"We don't take a world view which says, for example, that you have to have 20 per cent in the US and requires you to find trusts to fill that 20 per cent. Where we add value is by picking individual trusts to enhance the value of the portfolio." He cites from the Accelerated Growth Portfolio's major holdings. "Our largest holding is SR Pan European, a split-capital trust only about a year from its wind-up date and valued almost at par, so we are not taking discount risk.

"With Finsbury Worldwide Pharmaceutical, in the early part of this year, we liked pharmaceuticals and it became our largest holding, partly because it went up sharply, although we are starting to let go now.

"What boosted our return was that the traditional pharmaceutical stocks were going sideways in February and the biotech stocks were taking off. But the trust publishes its NAV figures once a month, so between times the shares trade in line with the assessment of their value in the FT, which values the trust in line with a global pharmaceutical index dominated by the big pharmaceutical stocks that were going nowhere.

"Some of the biotechs in its portfolio were doubling or trebling value, so we could see the asset value of the portfolio was growing while the price was remaining stable. We took our portfolio weighting up to 6 per cent from 3 or 4 per cent.

"Then, when the next month's NAV was published, the market latched on and the price started to rise. We have been feeding stock back into the market although we will still remain invested in the trust."

"Often, you can make money on an average trust perceived poorly by the market, or you can make money from a trust that has done well but where the manager has changed and it's still valued on its past performance. The market is slow to react to these changes."

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