The first time David Jane ran his own fund was during his days at Keele University while studying economics and statistics. As part of his thesis, Jane had to manage a synthetic unit trust.
“It was the 80s so our growth and earnings fund did well,” says Jane. “In hindsight, the strategy was a little naive. The fund did very well until 1987 but fortunately by then I had graduated.”
On leaving university, Jane’s career took him from Newton Investment Management to Axa Investment Managers and then to M&G Investments, where he became head of equities. Having left in 2010 to found the boutique Darwin Investment Managers, Jane has since become part of Miton Group after the latter acquired the former in June.
Jane has now assumed management of the £774m CF Miton Special Situations, £14m Miton Total Return and £5m Miton Global Diversified Income funds as well as the £192m CF Miton Strategic Portfolio following the departure of Martin Gray, who left the firm when the acquisition was announced.
Transferring from a self-founded boutique to a firm with a taste for acquisitions (Miton acquired Psigma Asset Management in July 2013) has not been a problem for Jane.
“Miton is still a boutique,” says Jane. “When I joined Newton, it was the same size as Miton is today and it has the same feel, which is good. The entire Darwin investment team came over with me. We have the investment capability and Miton has a very high-quality distribution platform, which is what we were attracted to.”
Since joining the City-based firm in June, the fund manager has already set about altering the inherited funds to his liking.
Gray was known for his particularly defensive style and Jane is adamant the funds will remain defensive but will now seek higher returns. As a result, Jane has already started spending Gray’s cash reserves and has turned over a third of the portfolio.
He says: “Our philosophy is exactly the same. These funds are focused on capital preservation and we are too. We believe we can make sure the funds are defensive but at the same time we hope to be able to earn decent returns.
“When you are five or six weeks in, you need to be broadly comfortable with the shape of the portfolio because it is a no-excuses business. I am very happy to take accountability for performance at this time.”
Jane immediately set about removing conflicting positions in the portfolios, such as large currency positions, because he felt he had nothing to add. Then he began adding new names to dilute existing holdings, which were also trimmed back.
He feels no pressure to exit these watered-down positions entirely, saying: “I am not in any hurry to sell out and incur transactional costs from exiting these collectives. Over time, the collectives will reduce but we will not be selling them straight away just for the sake of it.”
Jane is looking to reduce his collectives exposure because he favours buying direct securities, with the new additions to the fund being made via direct securities.
The manager will buy collectives only when he believes this adds value in an area where he cannot. He says: “We prefer to buy direct investments as it is cheaper than buying the funds and it allows us to be more clinical about what we buy and where we buy it.”
In terms of markets, Jane is cautious about the global outlook.
“I am more nervous now than I have been for some time because we have not seen a correction in so long. It is likely markets will go higher but we are running a relatively dampened-down portfolio for now.”
Within that portfolio, Jane has been shifting his asset allocation. With fixed income, and everyone chasing yield, he has made a move down the curve to longer-duration, more mainstream, fixed-income markets, which he views as contrarian, with many people buying shorter-duration securities.
Jane has also brought yield in the form of property.
He says: “As we see inflation coming off the bottom around the world and bond yields staying low, property is generally looking to be good value.
“We have been accessing this via real estate investment trusts.”
Jane has also increased his gold exposure because he still regards it as an effective hedge.
He says: “While we do not think inflation will run away from us, clearly one of the risks is that of an inflation surprise.
“The other risk is another running-for-cover moment such as if the eurozone crisis rears up out of the grave like the final scene of Carrie.”
Plus ça change…
After a career spanning several decades that has seen him move from one of the biggest fund houses in the UK to found his own boutique, Jane still regards the job of managing money as the same as when he started out at Newton.
He says: “The basic principles of fund management are the same. The industry has seen huge changes but it is still about sitting down and running a fund. The difference is just there are now more screens to look at.”
Increased use of technology and with it the prevalence of the internet is one of the biggest changes Jane has observed in his career.
“I first ran funds on card files and there were no computers in the office, which is inconceivable now,’ he says.
“It is brilliant walking into meetings with clients who have been able to research the fund themselves online.
“It also means the industry is more transparent than it used to be. This means it is harder to sell mediocrity.”
What’s the best bit of advice you’ve received in your career?
Not to let pride get in the way of pragmatism if the market’s going against you. Just like dressing for the weather – you don’t wear a jumper, a coat and an umbrella on a lovely sunny day.
What’s keeping you awake at night?
Our focus on capital preservation for our clients. That means scaling our intended risks properly and also trying to think about what our unintended risks may be.
What has had the most significant impact on financial advice in the past year?
The RDR is the big one, without a doubt. Now the dust is settling, most of the IFAs I speak to see the changes as positive.
If I was put in charge of the FCA for a day I would…
I am a pragmatist – and not just when it comes to investing so I would encourage a pragmatic culture.
Any advice for new advisers?
Take a long-term view for your clients and your business. Don’t get derailed by all the distractions that you come across.
June 2014-present: Fund manager, Miton Group
2010-June 2014: Founder, Darwin Investment Managers
2000-2010: Head of equities, M&G Investments
1999-2000: Deputy head of research, Axa Investment Managers
1992-1998: Director, Newton Investment Management