How two Wise men turned £1m into £1BILLION – in just 7 years
E ENTRUSTING a boutique investment house with your money can be a g gamble. But astu astute investors who put their fa faith in Wise Investment whenh i it launched the Evenlode Income fund in 2009 have been rewarded handsomely.
Evenlode, which reaches its seventh anniversary next week, has been an investment triumph. Now worth £1billion, it has rewarded launch investors with returns of 156 per cent – double those of a fund tracking the FTSE All-Share Index over the same period.
Not that the investment team at Wise Investment are prone to bragging. ‘We launched the fund at the right time in the depths of the financial crisis,’ says joint fund manager Ben Peters, rather coyly. ‘We attracted £1million of money, primarily from friends and family. Since then, we’ve been fortunate enough to enjoy what has been seven years of bull market conditions.’
As the fund’s name implies, income generation is the main focus for Peters and co-manager Hugh Yarrow – his brother-in-law. Their record has been exemplary, with investors enjoying dividend rises every year since launch – an achievement that few rivals have matched.
Peters says: ‘We’re constantly on the search for cash-generative businesses that can use the cash they earn to reinvest in business operations while paying a growing dividend. So we tend to gravitate towards firms that have patented products or strong brands – where their cash generation enjoys a degree of protection.’
Examples include drinks giant Diageo – maker of Johnnie Walker and Smirnoff – and consumer goods group Unilever, owner of Domestos, Dove and Flora. Both firms are key holdings in the fund’s portfolio of 39 stocks, though Peters, Yarrow and their two supporting analysts are constantly monitoring a further 41 companies that ‘tick all their boxes’ but which are too expensive or do not fit in with the fund’s preferred spread.
Peters says: ‘When you look at Diageo’s brands, some enjoy high barriers of entry. After all, you don’t make Johnnie Walker whisky overnight. And most Unilever products are repeat buys, which means they are pretty insensitive to economic downturns.’
A sprinkling of US companies – health products group Johnson & Johnson, Unilever rival Procter & Gamble, and software giant Microsoft – complement the predominantly UK portfolio.
Though the fund has rewarded investors well, Peters believes company valuations are at the high end. As a result, single-digit annual returns are more likely in future.
Wise Investment, set up in 1992 by Hugh’s father, Tony, is not a typical investment house. It is based in leafy Chipping Norton, Oxfordshire, with the Evenlode brand taking its name from a nearby tributary of the Thames.
‘The idea we’re conveying is that we have something here that is growing bigger,’ says Peters. The firm has two other Wise Investment branded funds and a small private client book, taking combined assets under management to about £1.4billion.
All 33 employees have a stake in the business, putting the focus on long-term success. Peters, a physicist by training, says Wise Investment and Evenlode Income are not interested in world domination. ‘We’re trying to build a business and a fund which are underpinned by sound investment processes that investors can readily understand,’ he explains.
So far, so good.