The people with billions at their fingertips
Three fund managers explain what they look for when selecting stocks
Saturday 08 March 1997
The City has a reputation as a community dominated by men in grey suits. It is a reputation that's finally starting to change - and fund management is one area where the pace of change has been faster than most, writes Ken Welsby.
That's because success in fund management depends on performance, rather than the old boys' network and increasing numbers of women are carving out successful careers in the industry. A few of them, like "supermum" Nicola Horlick, make headlines. Most simply get on with their jobs - and firmly in this category comes , who leads a team of 10 fund managers covering emerging markets at Abtrust.
The company began life as Aberdeen Trust, financing 19th century Scottish colonial development in Canada and elsewhere. Today it's a more broadly based fund management group with a strong international bias and particular emphasis on emerging markets.
Investing in emerging markets means fund managers must go beyond simply looking at a company's financial track record. "Company visits areessential," says Ms Ajmera. "Accounting standards vary so widely that we have to go behind the figures, meet and talk with the people and see the business for ourselves.
"Whenever possible we want to visit the plant or facilities, not simply meet the management. We never invest in a company which we haven't visited and last year, between the 10 of us, we visited more than 1,000 companies in different parts of the world."
In addition to her team management role, her individual responsibilities include the Turkey Trust, an investment trust which invests in shares listed on the Istanbul Stock Exchange.
It's a market which has experienced some uncertainty over the years, but one which has recently rallied sharply as legal hurdles to the government's privatisation programme have been overcome.
Although Ms Ajmera has a demanding job, she insists on finding time for "real life" away from work: "You know what they say about all work and no play - it would not be a life. It would just be existence."
Former chancellor Nigel Lawson has come in for criticism for taking a reported pounds 250,000 for promoting M&G PEPs and some people say they have been put off investing with the company because they don't trust him, writes Simon Read.
But allowing such prejudices to cloud their judgement could be a mistake. For behind the slimmer, new-look Lord Lawson you'll find a team of committed fund managers.
Typical is Richard Hughes, head of UK equities, who looks after M&G's pounds 1.4bn Recovery Fund. The 39-year-old former local authority accountant has been with M&G for 10 years, and is only the second manager of the fund in its 28-year life.
He deals in what are often called "turnaround stocks" - companies which may have experienced a fall in profits or change of management and which are in a state of flux. "What I'm looking for is the quality of the underlying business and the potential for the future," he says.
Mr Hughes' expertise has led him to invest in several winners for his 140,000 unitholders. Take Midland Bank, for instance: "We bought a big holding throughout the late 1980s and early 1990s which was disappointing to begin with. But when the bids for the bank came in from Lloyds and HSBC Holdings, the stock turned out to be a wonderful investment."
Other recent highlights include Granada, Asda, Storehouse and Burtons. "These are all household names which anyone could have invested in," explains Mr Hughes. "But the trick is to identify where there's a real possibility of a turnaround. Our average length of holding is over five years, which gives time for the stock market to recognise the recovery of the stock."
Running the pounds 218m Hill Samuel Emerging Companies unit trust and its companion investment trust has given Andrew Jackson a lot of pleasure since he took the job last May, writes Tony Lyons.
This top-performing fund specialises in smaller companies and has a clear investment strategy which starts with a "top down" look at the economy to highlight the likely top performing sectors.
Once this is decided, Mr Jackson and his team do their own research to pick companies which they think will do well over the long term.
"We are looking for those which will make us money over the long term," he says. "Small company investment is about capital growth."
Originally, the unit trust invested in companies with a market capitalisation of under pounds 50m, but as the fund got larger, it found it difficult to find stocks it wanted to buy. Today, it looks at companies under pounds 250m.
The investment strategy tells the team that 1997 will see a continuation of last year's consumer boom, fuelled by building society demutualisations, falling unemployment and economic growth. "This tells us to look at retailing, leisure, selected housing stocks, and other household shares such as private motoring," he says.
Mr Jackson became interested in the City during a work placement in a company treasury department as part of his business studies degree at Hatfield Polytechnic.
He intends running smaller company funds for a long time. "You have more chance of finding a star performer among smaller companies although there are more risks."
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