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Medals for long service

It has been hard to open the financial press recently without finding the not so smiling features of Anthony Bolton staring out at you.

Don’t get me wrong. My experience of the so-called “silent assassin” suggests he is good company socially as well as being an amazingly consistent fund manager and, let’s be honest, a photograph depicting the person who has arguably earned the title of Britain’s best manager of money will carry more weight if he appears serious and focused.

Anthony’s achievements speak for themselves but it is the fact he has been at the helm of his fund for a quarter of a century that has excited a great deal of comment. Such consistency of management is hard to find elsewhere. True, we recently heard about 78-year-old Nils Taube returning to fund management but even his record contains the odd shift of employer and fund.

In my days of managing money, I made the odd career move or two and took over responsibility for the occasional fund deserted by a manager for supposedly greener grass. There is an old adage in the world of investment management. The best time to rebalance a portfolio and to put it into the shape you want is when you take over.

Blaming under-performance in the future on the shares you inherited does not wash. It is best to take the hard decisions on day one and blame any short-term implications on the outgoing manager. This applies just as much to taking on a new mandate when a client decides to switch managers as when the same house remains in overall control but the people taking the decisions have changed – as is the case with the Fidelity funds. But firms these days tend to adopt a more collegiate approach and, anyway, Bolton is staying on to hold the hand of his successors.

It did get me thinking about the extent to which a change of managers can affect performance. Changing a portfolio is not without cost which set me thinking about who else has been sitting in the driving seat of their fund for a considerable time.

As luck would have it, the Association of Investment Companies recently published a list of the longest-serving managers and if you want proof that consistency in management aids performance, here it is.

Turnover among managers of investment trusts tends to be lower than in the openended side but even so the figures paint an interesting story. Of member companies that have 10-year records, an amazing 69 per cent have been managed by the same manager for at least 10 years. What is remarkable is that these long-standing players have achieved a share price total return of 205 per cent during this period – way ahead of the overall average of 152 per cent. With managers like Gartmore’s Brian O’Neill and the dynamic duo of Matthew Oakeshott and Angela Lascelles of Value and Income Trust clocking up over 20 years, there seems a strong case for picking funds with long-serving managers.

The US benchmark index the S&P 500 recently went into new high territory for the first time since March 2000. Any investment professional will tell you this index gives the truest guide to what is happening in the quoted company arena.

Our own FTSE 100 is still short of its all-time high, achieved over two months before the US market peaked. In the early weeks of 2000, technology shares were still going gangbusters. In early March of that year, over a third of the S&P 500 was represented by technology companies. Today, that figure is down to 15 per cent. Given the amount of money tracking this index through derivatives and ETFs, I feel somewhat relieved.

Brian Tora (brian.tora@centaur.co.uk) is principal of The Tora Partnership.

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