Anthony Hilton: Fund managers who get out and about – that’s what I call ‘active’

 

Given how many fund management groups there are, it is surprising how few do any meaningful independent research for themselves.

Some, of course, are passive managers, who do not need research as they simply seek to replicate the relevant indices. Others, though they pretend otherwise, are closet trackers, meaning they also buy only what is in the index and juggle with the weightings – holding a smaller proportion of banks, for example, if they don’t like that sector.

A third group are active managers who, in principle, make their own decisions but in practice rely heavily on the investment banks to come up with the main ideas, which they will then sift through.

Then finally there are the houses that really are active and do devote much of their time and energy to thinking about economic trends and looking for companies that they believe have genuine prospects.

It was one of the more successful of these, Neptune Investment Management, that took me and a few other journalists to California this week to see its research work in action by accompanying its analysts on visits to companies in which it may or may not invest.

Most are connected to the Silicon Valley heartland of technology and data and two at least seem to be carrying all before them.

Yelp, a web business that is broadly similar to Yellow Pages in seeking to provide a directory of local businesses, uses recommendations from the public to identify the best in an area and then seeks to persuade them to advertise. Its growth rates are phenomenal.

A second, Pandora, is an internet radio station that in effect tailors its programming to the musical tastes of each individual listener. It is already number one in 15 of the major US markets.

Technology of a different kind, genome research, lies behind a new treatment for prostate cancer being developed by Medivation.

But ironically the most intriguing product is one in which you can’t invest because it is private. This is a business called Mission Motorcycles, which claims to have developed an electric motorbike better in all respects – range, speed, acceleration – than conventional petrol-driven superbikes, while having batteries that take only 10 minutes to charge.

It all sounds too good to be true, but we shall soon know if it is, because Mission Motorcycles’ chief executive, Mark Seeger, says he plans to start full production next year. If all goes according to plan a few years after that, he will apply the same motor and battery technology to outboard motors and lawn mowers.

I would not know whether any of these businesses will make rewarding investments, but the bigger point is that I had not heard of any of them until this week – which does rather prove Neptune’s point. To be a successful investment manager, there really is no substitute for getting out there on the ground and looking.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders