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Four corners

It was interesting to attend one of G&N’s investment trust seminars and hear all four groups presenting kick off their sessions with an explanation of how they went about managing the funds at their disposal.

And very different approaches they adopted, too. From Aberdeen’s concentration on the saver nations (Japan, Asia, emerging economies) at the expense of the countries with fiscal deficits (UK, US, Europe), through the more complex strategies of Progressive and Glasgow Investment Managers to the quantitative screening adopted by JP Morgan, all had a good story to tell.

I find these seminars organised by Graeme Caton and Nigel Russell – the G and N of G&N – valuable. The chance to compare and contrast four managers in a single session can throw up some interesting facets. The way in which the above-average yield on the Glasgow Income Trust was achieved, as an example, was an approach I had neither expected nor come across before, although I am sure that using corporate bonds as a yield-enhancing asset class is commonplace. But with borrowed money? Probably rather less so.

And there was the gearing present in the Aberdeen-run Murray International trust – denominated in yen but hedged into sterling, to give a borrowing cost that still compared favourably with anything available in the home currency. Of course, gearing is not always a virtue in a portfolio.

The message I took away from this seminar was resources and inventiveness have joined flair and discipline in the armoury of managers. Quantitative screening is now common-place but how it is applied and the intellec-tual power behind the system used will count massively in its usefulness. Moreover, being prepared to take the contrarian view – and explain why in detail, as was the case with the Progressive trust being profiled – will undoubtedly suit some investors.

It is all about knowing what to expect. This is where investment management for individuals has changed so much in recent years. You could say it is a consequence of the bear market that ushered in the new millennium that makes private investors more interested in how their portfolio will behave. I consider it more a result of the migration of a professional approach to the business of investment management from the institutional arena to retail investors, together with availability of more sophisticated techniques and products.

In Europe, economic growth surprised on the upside, bringing the eurozone GDP rise to a figure above the US for the first time in some years. Mind you, the world’s biggest economy looks like it is starting to slow, which goes some way to explaining the softer tone by the Fed. Inflation moderated, but indebted-ness and the threat of a weakening dollar continue to cloud the outlook for US shares. The Middle East ceasefire brought some respite to the oil price which encouraged shares.

Brian Tora is investment communications director at Gerrard Investment Manager


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