Jennings joined Premier in March as senior investment manager, global equities. He previously spent almost six years at Morley and prior to that, 12 years at Sarasin.
The new fund, Premier global dynamic strategies risk, will draw on Jennings’ experience in managing derivatives as well as traditional equities. It will aim for a total return of 4 per cent a year above inflation over three-year rolling periods. The aim is to have a lower risk profile than the global equity market through the use of derivatives, allowed under the Ucits III rules.
Although the fund will invest mainly in a diversified portfolio of 35-45 global equities, derivatives will be used to control volatility and to protect investors from sharp falls in the prices of the stocks it holds. Jennings also has the flexibility to hold big cash positions if he expects markets to go through weak periods.
Jennings will not be constrained by benchmark weightings, but will invest mainly in big and medium-sized companies because these have more liquidity than smaller companies. He will select stocks that have a competitive advantage and fit his long-term investment themes, such as innovation and energy shortage. He will focus on high quality names with strong balance sheets to reduce risk. They will be stocks he sees as attractive on a 12-month view.
Managing risk is a prime concern, so Jennings will not take big bets on stocks, themes or currencies. Returns made in currencies other than sterling will usually be hedged back into sterling to reduce currency risk.
Premier says many investors are interest in absolute rather than relative returns, where performance can be described as good just because the fund has lost less than its benchmark index. The risks relative to pure global equity funds may be lower with this type of fund, but the returns could also be lower.
One of the concerns advisers may have about this type of fund is that although the manager is allowed to use derivatives, they may not have the skills and experience to use these tools. However, Jennings experience in this area could provide some comfort to investors.