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27th December 2013
Portfolio Adviser

Experience says now is not the time to invest in Asia

Avoiding an impersonal, tick-box mentality is key to TAM's fund picking while experience in managing money in Asia has taught the team that now is not the time to invest there.

 

A discretionary firm that focuses solely on the IFA market, TAM Asset Management’s top brass has its fair share of stockpicking experience. Chief executive officer Lester Petch is a former Asian equities manager at Hermes, while senior investment manager Christian Holland worked at UBS and made a career as a Japan equity fund manager for 12 years. This is invaluable when picking the right funds for the team’s portfolio.

Fund or fund manager?

“Because we have been in their chair before, we have a lot of empathy for the problems fund managers face and we are good at getting them to talk with us with a high level of disclosure,” says Holland.

“The last thing we want is to go into meetings with a tick-box mentality and try and wrong-foot the managers by asking them why they bought their worst-performing stock.”

With several high-profile managers on the move this year, a pertinent question for fund pickers today is whether they follow the fund or the fund manager. Holland puts emphasis on the former but acknowledges the two are undeniably interlinked.

He says: “For example, Aberdeen will not tolerate fund managers departing from its accepted investment process, and if they get too cavalier they are rapidly found out. So if a fund manager leaves Aberdeen it is not such a big problem for us.

Change of UK focus

“Whereas if we are invested in, say, the Chelverton UK Equity Income Fund and one of the two Davids [Horner or Taylor] left, we would have to do something about it, but we rarely just buy the investment process.”

The most high-profile departure in the fund space is Neil Woodford’s forthcoming exit from Invesco Perpetual, though TAM had already sold out of his Income fund and others in its four Focus model portfolios – Cautious, Balanced, Growth and Adventurous – prior to the announcement.

Holland says: “We started telling clients that these [giant UK Equity Income] funds had a great pedigree and track record but had pretty much done what they were supposed to do. They gave clients exposure to equities with some degree of yield during a fairly uncertain market, which followed that bull period of 2009 with repeated emergencies of geopolitical crisis that we couldn’t foresee.

“But last year we felt we were moving into a period of becoming very bullish on equities and felt we could add a lot of alpha by going for small and mid-sized UK companies.”

 

By Gary Shepherd

Link to original article:

http://www.portfolio-adviser.com/comment---analysis/asset-allocator-human-resources