Hawksmoor patience pays off with Vanbrugh boost

Hawksmoor Investment Management says some of the strongest performers in its Vanbrugh fund in recent weeks have been holdings that caused the most frustration at the end of last year.

Vanbrugh gained 3.3 per cent last month and Hawksmoor attributes some of this growth to closed-ended funds invested in cheap areas of markets that had seen their discounts widen sharply last year.

Vanbrugh’s holding in Aberforth smaller companies rose by 11.5 per cent and New City energy by 12 per cent.

Hawksmoor says that at the end of last year, the market was only interested in liquid assets and few investors would take risks. This situation hurt Vanbrugh at the time but left a lot of unrecognised value in its investment trust holdings that were trading on wide discounts.

Hawksmoor has been rewarded for its patience following the European Central Bank’s decision in December to pump liquidity into the European banking system. This alleviated the risk of a banking crisis so investors returned to the market and many assets that had been shunned were re-rated.

Fund manager Daniel Lockyer says: “Patience is the most important attribute for a fund of funds manager as sometimes you do have to wait.

“At least with investment trusts, the value will come out in the end because arbitragers or investors start getting angry and making it clear to the board they have to turn it around. We know the investment trust sector well and know the range of discounts at which trusts should trade.”