Established process
"I like to see a nailed-down, repeatable investment process from my fund managers," said Hargreaves Lansdown’s Rob Morgan.
"This is an area where more macro-led strategies fall down because the headwinds and opportunities out in the wider world are always changing and managers can only hope to get the timing right some of the time."
"Stock pickers can get consistency of performance from following the same thesis time and time again."
"AXA Framligton’s Nigel Thomas (pictured left) has a good grasp of both. He gets the major macroeconomic conditions just about right but is also an experienced practitioner. He knows his companies inside-out and knows how to take advantage of opportunities."
FE Alpha Manager Nigel Thomas runs the AXA Framlington UK Select Opportunities fund. FE Trustnet data shows that he has underperformed his peers in just two of the 12 years he has been managing funds.
High conviction
Bestinvest’s Ben Seager-Scott says he likes managers who have the courage to stand by their trades and see through their ideas.
"I look to managers that don’t just know their stocks but also have convictions in their buys. I don’t want to see a manager checking his notes when I ask him about the companies he owns because he relies too much on analyst recommendations. Sometimes it can take a little bit of time for the markets to recognise value and it’s important to have someone who will be patient."
"I think a good example of a high-conviction manager is David Dudding (pictured right) who heads up Threadneedle European Select. His portfolio is kept fairly concentrated, currently around 43 stocks, and holds some punchy weightings in stocks he has the highest convictions in. The top-10 account for more than 50 per cent of the fund."Dudding – another FE Alpha Manager – has an annualised total return of 16.9 per cent over nine-and-a-half years.
Patience
Chelsea Financial’s Juliet Schooling-Latter says that the ability to stay focused on the long-term is one of the key attributes she looks for in an industry that seems to be narrowing its horizon.
"I like managers who can take into account and have a good grasp of the macroeconomic environment. They need to be happy to invest for the very long-term and have the patience to wait for the market to come to them."
"Neil Woodford (pictured left) is a man who maintains the courage of his convictions. His record speaks for itself. He got out of the banks in the run-up to the 2008 financial crisis and is in defensives now while people are looking to add risk to their portfolios."Our data shows that £1,000 invested in Woodford a decade ago would now be worth £2,226, compared with £1,664 from his peer group.
Courage to admit to mistakes
Tim Cockerill, head of collectives research at Rowan Dartington, looks for a little humility in his fund managers.
"A lot about the investment management industry hinges on trust. I really respect managers who have the courage to admit when they are wrong, to drop a bombing stock or change direction when things aren’t working." "Carl Stick (pictured right), who runs the Rathbone Income fund, had a poor 2008 and rethought his process. I think it made him a better fund manager and his process is much more robust now. The record since then has been very impressive."
Ability to keep their head
Kerry Nelson, managing director of Nexus IFA, says she looks for strong leaders who can stay cool when things go wrong.
"You want guys in your portfolio who base their decisions on fundamentals and don’t lose their head when market noise gets too much. I look to managers with a calm, unflappable nature.""Tom Dobell (pictured left) has been running M&G Recovery since 2000. He is always calm in a storm. The fund was built after the turmoil of the technology bubble and he has seen through several crises since. He’s the kind of manager you can have in your portfolio and not worry about how he’s getting on."