Simon Evan-Cook, Premier Asset Management
The multi-asset team at Premier Asset Management has produced the sort of performance figures in the past 12 months for which many of their larger rivals would have sold their souls.
The group has managed to hit the sweet spot at a time when the markets have never been
more indecisive and volatile, as the fate of the eurozone continues to turn one way then another. Four of the group’s five multi-asset funds have been top decile in their respective sectors over the past 12 months, while the three-year figures are also not too shabby when compared to some of their bigger rivals.
Premier is no newcomer to the multi-asset space. The origins of the group’s range date back to 1995. Investment director and head of the team David Hambidge was part of the original team that set up the portfolios before being appointed lead manager in February 1999.
At launch, the products came very much under the fund of funds guise. Investment manager Simon Evan-Cook says the funds have gradually migrated to a multi-asset design to incorporate a raft of other asset classes on top of traditional equity and bond exposure.
The group’s flagship offering is the £115.7m Multi-Asset Distribution fund, which launched in October 1995 and sits in the Investment Management Association Mixed Investment 20-60% Shares sector.
Evan-Cook says the fund is a genuine income offering that targets a rising income over time, something that is currently increasing in popularity in the multi-asset space as investors clamber to that area of the market. He says the fund currently has a 45 per cent exposure to equities, compared with 25 per cent in corporate bonds.
“We probably have a contrarian view on equities at the moment,” he says. “We think the growing income story is as important as the high income story, given that over the longer-term inflation is going to be reasonably high as politicians may look to inflate their way out of the debt crisis.”
Evan-Cook says the £22m High Income fund -which sits in the same sector as the Distribution fund – also has a high exposure to equities as it looks to grow the income in an inflationary market.
The group has a third fund that also sits in the former cautious sector in the shape of a Conservative Growth portfolio. The £44m fund has not had the same stellar performance as its peers, but it has been a solid performer since launch.
“This fund is a more defensive fund than the others so it tends to underperform in strong markets, such as those we’ve seen in 2012,” says Evan-Cook. “It comes into its own when markets start to struggle.”
The five-strong range is completed by the £34m Multi-Asset Growth and £18m Multi-Asset Income and Growth funds, which sit in the Mixed Investments 40-85% Shares sector.
Evan-Cook says: “We do feel investors will eventually get out of their bunkers and look for growth and these funds have more of an international feel and more equities exposure.”
Evan-Cook says one of the key elements of the team’s process has been to steer clear of funds that have become too large, citing the Prusik Asian Equity Income fund as the type of offering they have invested in over some of the well-known larger funds in the peer group.
“We own this fund across all of our mandates and it has been a sensational performer in the past 12 months,” he says. “We have been very successful with our fund selection in recent times.”
Evan-Cook says small-cap exposure has also helped performance, citing the likes of Cazenove UK Smaller Companies and Aberforth UK Smaller Companies. The group has also started to see the upside of investing in Europe after a couple of years of pain.
Evan-Cook believes that with a total of £430m of assets under management, the group has benefited from being more nimble than some of its rivals by allowing the team to invest in smaller funds.
“We feel the range is in a strong condition,” he says. “We do not have too many funds and they are most importantly in the areas that advisers are looking to invest in, particularly as we are still at the start of the multi-asset story.”
Tony Yousefian, OPM Fund management
OPM Fund Management chief investment officer Tony Yousefian says the group has never been one to follow the market herd.
The OPM brand was launched in 2007, having previously been under the Smith & Pinching Portfolio guise, the Norwich-based discretionary arm of S&P Financial Services.
Yousefian says the fund of funds offering actually dates back to 2003 when the firm launched its first umbrella Oeic with sub-funds inside to help manage the private client portfolios.
“Up until that point we were running private client portfolios on a bespoke basis,” says Yousefian. “But then we thought it was easier to manage part of their assets in a unitised format and that is when we launched our own range of funds.”
The seed money for OPM Fund Management came from the private client portfolio side. At the time, Smith & Pinching had about 70-80 private client portfolios for clients of S&P Financial Services with assets of around £10m.
Yousefian says the firm operates a core/satellite approach which differs from many of its rivals in the market.
He says: “We have to do things slightly differently because if we simply launched another fund of funds range there would be no reason for the external IFA community to give us money ahead of the more established set-ups.”
Yousefian says the core of all the firm’s FOF portfolios will always be traditional long-only alpha generating managers across all the asset classes. The satellite portion then uses different instruments, which Yousefian says makes it a blended multi-manager and multi-asset offering.
He says: “It is the satellite part of the funds where we look to offer incremental value at the margin.”
OPM offers six funds, five of which Yousefian says are asset-specific rather than managed solutions.
“Most of our rivals have solutions-based offerings,” he says. “We chose asset-based because the core of the money from our funds is from private client portfolios and when you run private client portfolios you buy different asset classes.”
The team closed its £17m Balanced Managed fund in April 2011. The offering was merged into the Worldwide Opportunities fund and Diversified Target Return, the latter of which Yousefian claims is the only asset-solution based product in the range.
Yousefian admits the group did not have the best start as a single entity due to the onset of the credit crunch in 2008. He says: “That hit us hard just as the external marketing scheme was starting to go out to IFAs. We did stick to our guns and we regained our performance in 2009.”
The firm now runs £75m of assets, with the £38m Fixed Income fund the largest in the range.
Yousefian says the team is looking forward to RDR and has prepared for the change in markets with the launch of six risk-rated model portfolios, based on rising scale from high income to pure capital. The funds, which date back to the first quarter of 2009, are available through the Parmenion platform.
He says: “The portfolios offer a home for clients of IFAs for which it makes no commercial sense to build individual portfolios and the outsourcing solution is more attractive.”
Yousefian says the firm is comfortable with the positioning of the funds in the current climate and says many of the group’s calls have been correct in 2012.
“We started the year defensive and have gradually changed the emphasis from being 75 per cent low beta, low risk assets and 25 per cent higher risk,” Yousefian says. “We are now running at 65 per cent higher beta, higher risk and 35 per cent lower risk.”
Tom McGrath, Apollo Multi Asset Management
In its relatively short existence, Apollo Multi Asset Management has been exposed to some of the most volatile periods ever seen in modern markets.
The firm launched the week that Lehman Brothers went under and spread financial panic across the globe. Co-founder Tom McGrath admits the group was fortunate that it was one of the last multi-asset businesses to get underway before the crash.
The origins of Apollo come from Miton Asset Management, where McGrath and fellow co-founder Steve Brann both worked prior to a series of mergers which eventually led to the creation of MAM Funds.
Apollo initially launched with £10m of seed capital provided by Crosby Capital. The genesis of the firm came when Crosby acquired Forsyth Partners and brought in the investment management team, initially to look after the Forsyth assets but also to set up the Apollo business.
The firm launched its balanced and cautious funds – now Multi-Asset Balanced and Multi-Asset Cautious – in November 2008.
“The markets were whizzing all over the place,” says McGrath. “They shot up towards the end of 2008 and we were lucky enough to capture some of the upside and when we hit the nasty 2009 bear market we managed to defend the funds pretty well.”
Apollo revamped its investment range in 2011 with the launch of another two funds in the shape of the Multi-Asset Defensive and Adventurous funds. All four funds also sit in the Investment Management Association Unclassified sector, as the group believes none of the sectors are appropriate for their funds.
The group operates across eight different asset classes of equities, bonds, private equity, cash, commodities, currencies, alternatives and property, to blend the portfolios for each offering on the risk scale.
The funds have their own specific investment objectives and volatility targets backed up by Distribution Technology. McGrath’s Multi-Asset Balanced fund, for example, targets cash plus 5 per cent over a full investment cycle with a volatility target of 7-9 per cent.
Brann manages the Multi-Asset Cautious fund, while Craig Wetton and Ian Willings manage the Defensive and Adventurous portfolios respectively.
McGrath says historically the team has not run to benchmarks and will steer clear of an area completely if needed.
“We have had periods where we have had no exposure to UK equities and UK gilts,” he says. “They are high conviction portfolios where we see the future of the world.”
McGrath says the team looks to mega-trends, for example Asian consumption is something he looks at within his own Balanced fund.
He says: “The largest holding is Coupland Cardiff Asian Evolution to reflect that trend. We’ve also recently added a Pictet-Timber fund on the back of a US housing fund recovery.”
McGrath says the team is currently defensive on a short-term basis, citing the ongoing concerns in Europe coupled with the US fiscal cliff.
“We are expecting a correction in the next three to six months and we are looking to hold assets and then bounce back in when we feel the time is right,” he says. “We have been adding future overlays to protect the portfolio in this period.”
McGrath says the group has been able to raise more than £300m to date, much of which is offshore money, but adds that conditions in the UK have been difficult.
He says: “The UK has been challenging. Markets have not been kind and on top of that we’ve seen financial advisers looking to sort their businesses out ahead of RDR as well as passing exams.
“Saying that, we feel that we offer something different to the traditional multi-asset fund manager and that will help us in the future.”