Rob Burdett, co-manager of the Thames River Distribution fund, tells Cherry Reynard how its 2,400 sources of income contribute to more than just a high yield.
When the Thames River multi-manager team of Gary Potter and Rob Burdett built the Distribution fund in October 2007, they had a few key ambitions: a high and consistent yield, as well as broad diversification. With 2,400 individual sources of income, and the sixth highest yield of the 160 funds in the Mixed Investment 20-60% Shares sector, it has achieved those particular targets.
However, Burdett believes the search for high, diversified sources of yield has contributed to the strong capital performance of the fund as well.
The fund is top quartile over one, three and five years and around 12% ahead of the wider market over five years. Burdett highlights holdings such as Chelveton, an equity income fund focusing on small- and mid-cap companies that has provided a consistent yield, as well as strong capital appreciation.
We are more diversified than any other fund in the sector
He says: “There have been six holdings we have held since inception and they are all top quartile since the launch of the fund. These have provided a base for long-term quality. Each year, a different top five funds have led performance, which is why we see it as so important to diversify.” Other top performers for the fund have been Veritas Global Income, GCP Infrastructure and Darwin Leisure.
Key to the pair’s philosophy is that diversification begets consistency. They believe investors are seeking consistency from their investments having been forced out of cash and, increasingly, fixed income.
Burdett believes investors have to look further afield for sources of diversified income, which suits the team’s research-heavy approach. For example, the portfolio now holds asset classes as diverse as floating rate notes, European property finance, caravan parks and collateralised loan obligations.
He says: “We believe we are more diversified than any other fund in the sector. This is good for growth investors and for those moving out of bank deposits.”
Burdett and Potter have straddled the middle ground of multi-management: not as aggressively asset-allocation driven as some of their peers, but not pure fund selectors either, aiming to add value through both. Across all of their funds, the pair aim to blend the ‘grey hair’ of more experienced managers, with newer, eager managers.
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