Hambi runs more than £5bn across his six multi-manager ranges, including the Standard Life Investments MyFolio Multi Manager and Standard Life Investments MyFolio Managed lines of products. All his funds are risk-targeted and reside in the IMA Unclassified sector.
The manager’s largest overweight is currently to the property market, which had another strong run in 2015, and he expects his positioning to stay constant here.
“We still like property,” Hambi said. “You’ve got fantastic yields on property – well over 5 per cent on commercial property – and the economic environment is pretty robust. We believe over the next couple of years you’re still going to see a very good return from property.”
FE Analytics shows property was the fourth best performing sector in the Investment Association universe in 2014 with an average return of 13.12 per cent. This takes the peer group’s three-year average return to 32.29 per cent, which is broadly in-line with the gain made by UK equities.
Performance of sector vs index over 3yrs
Source: FE Analytics
Hambi has two property funds appearing in his top 10 – Fiona Rowley's £3.8bn M&G Property Portfolio and Marcus Langlands Pearse and Ainslie McLennan's £3.2bn Henderson UK Property.
Both are popular with investors and are well regarded by analysts, holding a ‘recommended’ rating from Square Mile. The fund research consultancy says the M&G fund is a “sensible proposition for investors seeking exposure to UK commercial property” while the Henderson offering has “a well managed portfolio of commercial property providing income and the potential for capital growth.”
Hambi’s second largest overweight is to US equities, which have risen strongly over the years since the financial crisis. The S&P 500 is up 118.53 per cent over seven years, compared with a 74 per cent rise in the MSCI AC World index.
The overweight to US equities in Hambi’s funds did peak at about 4 per cent but he has been steadily bringing it down more recently. He currently has a 1.40 per cent overweight to the asset class in his MyFolio Managed II fund, for example, but sees this as coming down in the immediate future.
“We are concerned that equities have done so well in the US that valuations are pretty rich. Also, you’ve got the strong dollar which is now causing earnings to be reduced and we are seeing earnings disappointments in the US,” the manager said.
“At the moment – and it could happen next week – we are looking to take that exposure down.”
Hambi’s funds take passive exposure to the US through the Vanguard US Equity Index fund while Artemis US Select appears in the top 10 holdings of a number of his portfolios.
This fund, which launched in September 2014 after manager Cormac Weldon joined Artemis from Threadneedle, is up 9.70 per cent since inception, just beating the returns made by the S&P 500 and the average fund in the IA North America sector over this time.
Performance of fund vs sector and index since launch
Source: FE Analytics
The manager is also looking to cut back on his exposure to UK equities. This asset class currently has a 0.95 per cent overweight in his MyFolio Managed II fund.
He explained: “The UK stock market is dominated by a lot of resources, oil and commodities companies and this is an area that concerns us. The UK economy is looking to slow a little bit and if there are interest rate increases later this year that could impact. You also have political worries from the election.”
UK equities tended to struggle last year, owing to geo-political tensions, weakness in the eurozone, concerns over interest rate rises and the plummeting oil price, which affected a number of the market’s largest companies.
As the graph below shows, the FTSE All Share had significantly lagged the MSCI AC World index over the last months with a rise of 6.14 per cent. Global equities, on the other hand, have gained more than 11 per cent.
Performance of sector vs index since launch
Source: FE Analytics
Among the UK funds used by the manager are JOHCM UK Dynamic, Majedie UK Equity and Threadneedle UK Equity Income.
After trimming exposure to US and UK equities, Hambi plans to lift weightings to European and Japanese stocks. The two each have a 0.70 per cent weighting in his MyFolio Managed II fund at the moment.
Both asset classes were out of favour with investors until their governments embarked on ambitious stimulus programmes. Japan launched its ‘Abenomics’ programme of fiscal stimulus, monetary easing and structural reforms at the end of 2012 while the European Central Bank last month announced that it is to embark on full-blown quantitative easing later in 2015.
The multi-manager flags up both markets as being attractive on valuation grounds. Over the past five years the MSCI AC World index advanced 69.74 per cent; meanwhile, the Euro Stoxx is up 38.30 per cent and the Nikkei 225 just 37.64 per cent.
In his various funds, Hambi currently takes some passive exposure to both regions through the BlackRock Continental European Equity Tracker and the BlackRock Japan Equity Tracker.
There’s also active exposure to Europe through the likes of FE Alpha Manager Will James’ Standard Life Investments European Equity Income and Mark Page and Laurent Millet's Artemis European Opportunities.
Both funds have solid reputations. Standard Life Investments European Equity Income appears on the FE Research Select 100 list of preferred funds and holds an ‘A’ rating from Sqaure Mile, while Artemis European Opportunities has four FE Crowns and also holds a Square Mile ‘A’ rating.
He also holds Andrew Rose’s Schroder Tokyo in some portfolios for active Japanese exposure. This fund also has a strong track record and is rated ‘AAA’ by Square Mile, who describe Rose as “one of the most experienced Japanese equity managers in the industry”.
Performance across Hambi’s funds has been healthy. Standard Life Investments MyFolio Multi Manager III, for example, is up 26.50 per cent over three years, compared with a 33.82 per cent gain in the FTSE All Share and an 18.28 per cent rise in the Barclays Sterling Gilts index.
Performance of fund vs indices over 3yrs
Source: FE Analytics
What’s more, the fund has achieved this with annualised volatility of just 4.98 per cent – compared with 10.30 per cent for the All Share and 6.16 per cent for the gilts index. Its maximum drawdown is 3.30 per cent, which is significantly lower than both indices.
