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Lawrence House’s portfolio caution

Lawrence House Financial Management says that, unlike some multi-managers, it is wary of holding the same funds and fund managers across all of its portfolios.

Fund manager Alan Stokes says he has seen many cases of fund managers falling in love with a fund or an investment company and their portfolios have suffered as a result.

He is keen to avoid this when managing Lawrence House’s multi-manager funds so he has imposed some restrictions when selecting funds.

Lawrence House never holds more than two funds from the same investment company in its portfolios and does not replicate holdings across its fund range, preferring instead to pick a different set of funds for each portfolio.

According to Stokes, the problem with holding the same funds across the range is that investors may have exposure to more than one fund in the range, so the impact of poor performance in those holdings would potentially be intensified.

He says: “We are keen on reducing risk and we have always felt that if you have a concentrated number of funds and have the same fund managers in your portfolio, this potentially increases the risk.

If something comes along that nobody can foresee, like an American earthquake, it will hurt all the portfolios – and I do not want all the portfolios looking the same.”

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