Fund with a whole world of expertise

FUNDS that build a portfolio of other funds – known as ‘funds of funds’ or ‘multi-manager’– can get a bad press. This is because investors not only pay the fees on the umbrella fund but also for each and every one of the underlying funds.

But the justification for this double layer of management charges is that you have access to wider expertise – as well as a vast range of underlying company shares – which will hopefully boost your wealth to compensate.

This style of fund is often the only way for ordinary investors to get a look in on certain funds normally only available to institutional investors.

Troy Asset Management’s Tom Yeowart takes his own particular approach with his Spectrum Fund – preferring ‘interesting boutique managers’. These are independent fund firms that tend to focus on a particular part of the market and have the potential to do well because they are less constrained than the bigger brands – and rarely make changes to their portfolios just for the sake of it.

Yeowart says: ‘They tend to be more focused and have a longterm alignment with my goals of finding stocks with strong performance.’

He points to one of his biggest holdings, Findlay Park American, a giant and successful fund held in the portfolio since Spectrum launched in 2008. ‘It’s been going for 21 years and been closed for over a decade to new investors. It cannot be accessed by broker platforms.’

He likes the fact that its managers focus on one thing and on doing it really well – in this case finding decent-sized American companies with strong performance.

On this side of the Atlantic he holds Aurora (now managed by Phoenix Asset Management) which is an investment fund focusing on UK ‘value’ companies. These are quality firms with good growth potential where the share price is undervalued and so priced attractively. Yeowart says: ‘When I look at fund managers I want them to have humility and be always wanting to improve – to be better investors.’

For this reason Yeowart takes his time to make his selections across managers with different skills and assets – and when he has made his choice he tends to keep them for a long time. Turnover of the holdings in the £133 million fund over the past three years has been just 5 per cent. The net result is that he runs a highly diversified fund – both by style of investment, type of asset and geography. As well as Findlay Park American, he has held since launch Brown Advisory Latin American, CG Real Return (global government index-linked bonds) and Japan specialists Morant Wright, Stewart Asia Pacific Leaders and Lindsell Train Japanese Equity.

A more recent addition is Egerton Capital Equity – the fund’s largest holding – which itself offers a widely diversified exposure both by country and stock type.

To add some ballast in these turbulent times, Yeowart also has exposure to gold – 4 per cent – through Gold Bullion Securities. This is a passive Exchange Traded Fund, with no fund managers in sight.

Patrick Connolly, of adviser Chase de Vere, says the fund is one of the best performers in the so-called ‘flexible’ sector – in the last year it has returned 9 per cent, more than double the performance of the FTSE AllShare. He says: ‘It has a proven record of managing downside risks and providing strong longterm returns. The major drawback is the ongoing charges which, although they’re capped at 1.5 per cent per annum, are still expensive.’