Fiducia Wealth Management
Posted in Investing, Fund Manager Q&A, Wealth Management on 20.01.20
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Each month we post a Fund Manager Q&A in an effort to give a little insight into the processes involved in investment management and to throw some light on what concerns you may or may not have.

This month, we hear from the fund management team at Premier Miton Investors:

Fiducia Wealth Management: What is the approach to running the Premier Multi-Asset Absolute Return Fund in comparison to your Defensive Growth Fund?

Premier Miton Investors: The Premier Multi-Asset Absolute Return Fund aims to generate positive returns over a rolling three-year basis through a diversified, multi-asset portfolio of funds and other investments managed by carefully selected, specialist managers. The fund is managed by an experienced multi-asset, multi-manager team of six investment professionals, led by David Hambidge, with an average 24 years of investment experience. The investment style is a blend of top down and bottom up decision making driven by assigned responsibilities for coverage of different asset classes and investments. These investments are expected to perform in a way that can generate positive returns in any market conditions, although there is no guarantee that this will be achieved.

The Premier Defensive Growth Fund on the other hand aims to generate positive returns over rolling three-year periods through a portfolio that has direct exposure to a variety of asset classes. The fund is managed by Robin Willis and Daniel Hughes, who are part of the fixed income and absolute return strategies team. They construct and continually risk model and rate the portfolio, while pursuing a variety of investment themes including discount opportunities, relative valuation, defined investments and short-term catalysts, to deliver the appropriate risk and return profile. 

FWM: Is your low volatility approach the only viable option for low risk investors in the current environment?

PIM: Both the Premier Multi-Asset Conservative Growth Fund and the Premier Multi-Asset Absolute Return Fund are constructed with individual investments that provide the expectation of an absolute return with (in most cases) a reasonable degree of cushion in so doing. The construction of the portfolio prioritises diversification within the fund and to wider financial markets. To that end, it is not necessary for equity markets to rise for our conservative equity positions (structured investments and ZDP’s) to make gains within their conservative parameters. Similarly, we are deliberately avoiding duration, a risk which has become increasingly volatile, within our credit selections. The use of less conventional investments with a positive return outlook should provide natural diversification versus more traditional asset classes, providing more protection during more difficult market conditions. The funds are not designed to act as a hedge to a more challenging backdrop as it is our belief that a lot of ‘insurance assets’ look less reliable in that regard, whilst not providing much certainty of a positive return outlook based on their fundamentals.

Whilst we would hope the fund will perform well during most market conditions, it should be highlighted that correlations constantly change, and prices of our holdings may also reflect wider sentiment. We have endured many such periods historically, each time using any valuation opportunity as a way of improving the fundamental strength of the fund and/or the return potential. 

FWM: How can you control costs given lower return expectations?

PIM: Our focus is on adding value to our clients through active investment management to deliver good investment outcomes after fund charges. Premier Miton Investors operates a fund charges model which includes an annual management charge paid to us, plus other costs, in particular the costs of investing into funds in which the overall fund invests. There is no fixed operating cost, which means all cost savings to third parties, due to increased fund size or business negotiations, are passed on for the benefit of our clients. We look to keep costs as low as possible by regularly reviewing our holdings and negotiating with our providers. 

FWM: If volatility remains low in future how will the fund perform and what are the challenges you will face? 

PIM: While a low level of volatility might suggest that there could be fewer opportunities to add positions to the fund, we believe that there are enough fund specific opportunities to add value and contribute to performance. Defensive auto calls and long/short equity funds, for example, can generate attractive returns even if equity index levels do not rise. In addition, the long/short equity funds that rely on the fund managers to generate alpha regardless of market conditions should still be able to produce a positive return in a lower volatility environment. 

FWM: If markets were to suffer a general fall in value how would the fund be positioned? 

PIM: The fund has recently proved its capacity to protect during periods of equity drawdowns, as illustrated in the performance table provided. If equity markets, or indeed bonds, were to suffer a fall in value, this can create opportunities to add exposure to defensive auto calls, convertible bonds or other equity.

Source: FE Analytics, taken on a bid to bid, total return, UK sterling basis, based on class C accumulation shares, from 31.08.2014 to 31.10.2019. Past performance is not a guide to future returns.


Fiducia Wealth Management
Posted in Investing, Fund Manager Q&A, Wealth Management on 20.01.20

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: [email protected]

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Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

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