Hawksmoor Investment Management says it is standing by managers with good longterm track records who are struggling to find their form.
Some funds held by Hawksmoor in its vanbrugh fund of funds are run by managers with solid track records but have produced poor returns this year.
Hawksmoor believes it is dangerous to sell out of these funds on the basis of short-term performance as this may coincide with the manager getting back on track.
Rather than chase short-term performance by selling funds whenever managers hit a bad patch, the firm monitors the situation, finds out why the funds are underperforming and makes sure the original reasons for holding a fund are still valid.
One example of a manager who retains Hawksmoor’s support is Stephen Harker, who runs GLG Japan. Hawksmoor says Har-ker is a contrarian investor who takes big positions to back his investment views. Harker has invested heavily in financials, causing GLG Japan to lag the market. But Hawksmoor feels that the reasons for this position are sound and that it is only a matter of time before the fund bounces back. The firm also believes the fund is inv-esting in an area with good upside potential.
Another example is Stewart Cowley’s Old Mutual strategic bond fund. At the end of last year, Cowley took on board the upward pressure on interest rates and bond yields along with worries about inflation and sovereign debt, so he positioned the fund to profit from falling bond values. This was the wrong position from which to benefit from the subsequent rally and Cowley changed tack to benefit from the tail-end of the rally.
Chief investment officer Richard Scott says: “Managers do lose their way sometimes so you have to keep on top of it and make sure they still have fire in their belly, that they have well thought out views and are backing their convictions.”