With concentrated portfolios, fund managers should always have their eyes on the market in order to ...
With concentrated portfolios, fund managers should always have their eyes on the market in order to adapt quickly to any changes in newsflow, according to Ashley Willing, senior investment manager at Gartmore.
In discussing the group's new range of Focus funds, Willing described concentrated portfolios as not necessarily better, just different. He said: 'We follow stocks others may leave behind because for most a 5% rise in the stock will not feed through to the overall performance of the portfolio but in a concentrated portfolio it can mean 15 basis points of outperformance.'
Sell disciplines on these 30-stock portfolios, which take average stock bets of 3%, are also an important part of the investment process, he noted, adding that Gartmore has a 10% loss limit on the portfolios in its Focus range. He said: 'You have to be able to cut early and to do that you need to be on top of the newsflow. We also have a strong culture of taking profits ' there is no point being greedy.'
Willing, along with Neil Rogan, manager of Gartmore Global Focus fund, told intermediaries that in order to effectively manage a portfolio of 30 holdings, the manager needs to use a mix of strategic and tactical ideas by weighting the fund with stocks in which performance may take time to come, along with short-term plays based on mis-pricing and anomolies in the market.
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