‘Small com­pa­nies are great – as long as you can sell’

The Daily Telegraph - Your Money - - FRONT PAGE -

For the past two decades John Chat­feild-Roberts has run the Jupiter Mer­lin range of mul­ti­man­ager funds, which in­vest in a range of port­fo­lios run by other managers. There are five funds in the Mer­lin range, in­clud­ing the £2.9bn Mer­lin In­come Port­fo­lio.

Mr Chat­feild-Roberts tells us how he dis­cov­ers tal­ented new fund managers and shares his views on one of the in­dus­try’s most con­tro­ver­sial issues: fees. fund­ing is with­drawn prop­erly.

We would have bought smaller com­pa­nies and emerg­ing mar­kets a year ago, but they are very illiq­uid and we try to man­age the port­fo­lio to be bul­let­proof – we need to be able to sell as­sets in dif­fi­cult times. We also need to be able to en­trust cash to managers who are best placed to buy in those times when prices are at­trac­tive.

John Chat­feildRoberts over­sees £7bn at Jupiter. He tells Laura Suter how he iden­ti­fies good fund managers

We have about 35 in­vest­ments across the five port­fo­lios in the Mer­lin range, with some over­lap be­tween the funds. In the In­come port­fo­lio we in­vest in about 12 or 13 funds, while in the Bal­anced port­fo­lio we have 18 or 19.

We want to be rel­a­tively con­cen­trated, be­cause if you in­vest in eight funds and they each have on av­er­age 50 stocks, you end up with 400 stocks – al­though of course there is some over­lap be­tween them.

CV: John Chat­feild-Roberts

at Hen­der­son. He was ap­pointed Jupiter’s chief in­vest­ment of­fi­cer in 2010, but stood down from this role five years later to fo­cus on the funds. No, I think with in­vest­ment trusts the liq­uid­ity is pretty thin. I think it’s pos­si­bly fine as an in­di­vid­ual in­vestor, but if we’re go­ing to have hun­dreds of mil­lions in a trust and want to get out, we’re stuck. Yes, we have sold out of Wood­ford en­tirely, but when­ever we sell we never com­ment on the rea­sons.

We have switched the money into Even­lode In­come, which we have high hopes for (see box, right). They would in­clude An­gus Tul­loch, James Find­lay and Neil Wood­ford. We in­vested in Tul­loch (First State Asia Pa­cific) in 1992 or 1993, and the Mer­lin funds were al­ready in­vested in Wood­ford, who was then work­ing at In­vesco, when I took over in 1997.

Un­for­tu­nately, it is hard to find data that goes back that far, but I do know that we bought Find­lay Park Amer­i­can when it launched in 1998 and it was $10. Now the units are worth $104.86. I think it was called Australian Nat­u­ral Re­sources. For­tu­nately we didn’t buy very much, but it was a fund that in­vested in small min­ing stocks based mostly in Aus­tralia.

We lived to tell the tale, but def­i­nitely did not cover our­selves in glory. I learnt three lessons: that small com­pa­nies are fine un­til Ab­so­lutely. I own Mer­lin Bal­anced, which suits my risk pro­file, as it is mostly in shares but has got a lit­tle bit in bonds. I have a sig­nif­i­cant amount in it. I think peo­ple should in­vest in what they man­age. We are end­lessly asked about this. We have beaten down the charges of most of the funds in the port­fo­lio, apart from Find­lay Park, which of­fers no dis­counts to any­one.

But ul­ti­mately it is a value judg­ment: we will pay more for a fund that is much bet­ter and will de­liver bet­ter re­turns.

I think that as a man­ager if you can’t de­liver de­cent per­for­mance after fees over a de­cent time pe­riod you should shut up shop and go home. We first in­vested in May 2014, when the fund was roughly £50m in size. The fact it was a small fund – and that no one else was much in­vest­ing in it – was def­i­nitely a bonus.

We were look­ing for an edge over ri­vals, and that means find­ing managers oth­ers have over­looked. We had come across Hugh Yar­row (near right with Even­lode chief executive Ben Pe­ters) when he was work­ing at Rath­bones, but we sub­se­quently lost touch with him – so un­for­tu­nately we missed the first five years of his fund.

You get a feel for peo­ple who are com­pet­i­tive and hard-work­ing, who re­ally care about in­vestors and who have what it takes.

You don’t need to be in­tel­lec­tual to be a good fund man­ager but you have to have a cer­tain qual­ity – and over time you can recog­nise this. Even­lode’s team is young and so we think they have a very good long run at it. They have also in­di­cated that they will re­strict the fund size, which we think is im­por­tant to main­tain per­for­mance. In­vest­ment styles go in and out of fash­ion and their approach will not al­ways be in fash­ion. But while we have got cen­tral banks con­tin­u­ing to print money there is mass distortion in the mar­kets. Growth for com­pa­nies is very hard to come by. Even­lode’s style, which is “growth at a rea­son­able price”, seeks to iden­tify as­sets at prices cheaper than the av­er­age; com­pa­nies with good bal­ance sheets and com­pa­nies that are able to con­tinue grow­ing. How­ever, we’re aware that noth­ing ever goes up in a straight line, ei­ther.


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