Roger Guy has told Investment Week he has no plans to leave Gartmore any time soon and denies that m...
Roger Guy has told Investment Week he has no plans to leave Gartmore any time soon and denies that managing the Capella hedge fund is taking valuable time away from his Gartmore European Select Opportunities (GESO) fund.
The unit trust has seen its ranking slip over the 12 months to 15 May, dropping to 66 out of 101 funds in the sector. The net asset value of the fund has also dropped from £2.07bn in 2000 to £2.03bn as of 15 May 2001. Over the same period, the Capella hedge product has outperformed the GESO portfolio.
Guy's pay is linked to the performance of both funds but much of his bonus package is structured to tie him in on a rolling three year basis. He said: 'I like working here and Gartmore has done a lot to keep me. I have absolutely no intention at present of leaving.'
Amid concerns that the downturn in GESO performance is due to the Capella hedge fund, Guy said the two portfolios are run hand in hand with a similar philosophy, style and substantial cross-holdings.
Guy said: 'I don't split my time between the two. We run the funds with a very similar philosophy: 50% long term and 50% short term. We are looking for the same kind of ideas. All that happens with the hedge fund is that some of the trades are shorter term than for the unit trust ' two days to a week.'
Trading at the margins of the fund has always been a large source of outperformance for GESO. Guy said: 'I spend all day at the desk and I have always done that. The only difference with the hedge fund is that I look for good short ideas and have to work that little bit harder.
'My working day has changed. I used to get in at eight but now I get in at seven so that is an extra five hours a week. I never have a lunch break, which is an extra four hours a week, and I go home an hour later each day.'
He also said that he does not do company meetings or have people management responsibilities.
'People say that you can't do the two but you can very easily if you are running with a similar style and philosophy. It is just an extension of what you have always done. If I was trying to run the hedge fund differently it would be impossible.'
The hedge fund has performed better than GESO over the past year but Guy said most of the hedge fund's performance this year has been on the short side.
Half of the fund has always been constructed using stocks from the Gartmore core stock list. Guy said: 'If you look at GESO over the last 18 months since we launched the hedge fund, the unit trust is top quartile. I don't think you could claim it would be top quartile if you couldn't run the two funds together.'
He acknowledged that a failure to move into old economy after moving out of technology in March and April has harmed his unit trust performance. He also said the size of GESO has not been a handicap as he has never relied on small and mid-cap stocks for outperformance, although he acknowledged that the size of the fund costs him around 1% to 2% in performance terms a year.
Guy, who is assisted by fund manager Guillaume Rambourg, has reduced risk in the unit trust this year, bringing the tracking error down to around 2.5% from a more typical 4%.
He has no big sector bets as the market remains volatile. The number of stocks he holds has remained close to the 80 to 100 positions he has always held since taking over the fund over in 1993, when it was just £15m. Investment Week 4 June 2001
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