Can you tell us a bit about your background before you joined?
I did my degree in Estate Management at what is now the University of Greenwich. I then spent a year at Reuters in their Accounts Department in a temporary accounting job. After that I went to the Church Commissioners for three years learning the ropes in investment as a US equity investment analyst before I moved to Ecclesiastical in 1988. I was appointed Fund Manager of the Pension Fund in 1990 and the Higher Income Fund in 1994, and then the International fund in 1999.
What are your current responsibilities?I currently manage the same three funds (Pension Fund, Higher Income Fund and the International Fund), and I’ve taken on one more which is the Amity Sterling Bond Fund which I share with colleague Chris Hiorns.
Tell us how it felt to be included in Citywire’s top Fund Managers list?Well it’s nice to get some industry recognition, and it’s rewarding for your own sake but more importantly it’s rewarding for Ecclesiastical as it raised the profile of the organisation, and in particular the funds (the International Fund and the Higher Income Fund).
Given we’re relatively small to medium size players in this field, it’s very useful publicity to say we’ve got the best performing funds over a period of time. It was also certainly useful and instrumental, or one of the factors at least, in generating record sales that we achieved in 2011.
Do you have any golden rules to ensure consistency of performance?I would say my golden rules are, in terms of keeping performance up and strong, is to avoid benchmarking. One of the main reasons why so many fund managers underperform is because they benchmark themselves to a particular index.
The reason we avoid benchmarking is because at certain times it will encourage fund managers to buy stocks that look expensive. For example, if you take the US market which accounts for 55% of the global market, fund managers might be encouraged to buy stocks that look expensive just to keep themselves within that benchmark weighting and similarly encouraged to sell stocks that look cheap for the same reason. Therefore it’s vital not to go down the benchmarking route and that you remain a stock picker.
We like stocks that have simple business models that we understand, for example ones that don’t have high levels of gearing (not borrowing money) and that have good long term track records with some competitive advantage in their industry.
Why do you think it’s important to invest ethically now?We continue to see strong client interest around investing ethically and investing with values. Generally in light of the financial crisis and the failing trust that we have seen in the financial system, I think that has continued to cast a favourable light on SRI (socially responsible investing). We think it’s good for investment and good for new business.
We have a holistic approach which not only evaluates the financials of the company but looks at the intangible aspects such as their environmental, social and governance policies. That’s all part and parcel of our stock picking strategy at Ecclesiastical which is integrating the ethical and the financial analysis side.
All the stocks that we have in our portfolios are chosen because on financial grounds they look strong and they look cheap on evaluations but they are also stocks with a lower risk because they take into account these more intangible factors. Those companies that don’t have a good governance of risk factors are more likely to be those companies that go belly up.