Parsons says that the £596m fund was one of the first funds he ever bought for his personal pension, as it fitted in well with his long-term investment horizon. He bought the fund back in 2005 because he wanted a manager who had witnessed a number of market cycles, which has paid off handsomely over the turbulent eight-year period.
"Looking back historically through my pension, I would say Marlborough Special Situations has to have been the best choice I’ve ever made," he said.
"I was attracted to the fund because of Giles Hargreaves’ longevity and manager tenure. He has been running money in one way or another for over four decades and has witnessed a variety of market cycles."
"I really like that he looks down the market cap spectrum and I realise the inherent risk of investing in smaller companies, but that is why it is in my pension, because I can’t see myself retiring for a while so I am happy to ride out any volatility."
"He is a very highly respected and rated manager and he has a very good and well-resourced team behind him."
Hargreave (pictured above) has managed Marlborough Special Situations since July 1998.
According to FE Analytics, the fund is the best performer in the IMA UK Smaller Companies sector over the last decade, with returns of 574.02 per cent.
The average fund has made 235.33 per cent over this time.
Performance of fund vs sector over 10yrs
Source: FE Analytics
Marlborough Special Situations is also a top-quartile performer over three and five years; however it has fallen slightly short of the sector in the shorter term.
This is not something Parsons is overly concerned about, though.
"It is all about appreciating what you are buying into," he explained. "When there are bouts of market euphoria, it will perform well but may not outperform others because Hargreave has a very diverse portfolio."
"People may say that holding that many stocks is an impossible job for just one manager; however he has a large and experienced team behind him, so it isn’t something I worry about."
Although the fund has a slightly higher annualised volatility than the sector over 10 years, it has been less volatile over the short- and medium-term.
The fund has a hugely diverse portfolio of 249 holdings. Our data shows that its top-10 account for just 13 per cent of total assets, while the top-100 holdings account for just over 70 per cent.
Hargreave’s largest sector weighting is to industrials, making up 30.5 per cent of the portfolio. Ashtead Group, RPC Group and Melrose Industries are among his top-10.
There are five funds in the IMA universe that count Marlborough Special Situations as a top-10 holding, one of which is the Rathbone Multi Asset Enhanced Growth Portfolio, run by FE Alpha Manager David Coombs.
Hargreave’s fund has an ongoing charges figure (OCF) of 1.53 per cent and requires a minimum investment of £1,000.
Looking to the future, Parsons says he is tipping the five crown-rated Legg Mason Japan Equity fund for similar success in his pension, because he feels now is a good time to add exposure to the region.
"I initially went into the fund in January and have topped up subsequently," he said.
"This was a decision I made at the start of the year as I felt there was an opportunity in Japan as there was genuine belief that the so-called 'Abenomics' would be fulfilled."
"So far, both the prime minister and the Bank of Japan are doing what it takes to stimulate inflation."
"Whilst this fund has benefited, I am not going to say there won’t be volatility down the line. However, I hadn’t had any exposure to Japan for a while so I thought I ought to change that."
"Obviously it has had a very good year but I cannot stress enough that past is no guide to future performance."
"I know a lot of people have had their fingers burnt by Japan over the years, so I wouldn’t say I am going in blind to that fact."
The Legg Mason Japan Equity fund has been a dominant force in the IMA Japan sector in recent years, topping the sector outright over one, three and five years. It is also a top quartile performer over 10.
It has rallied strongly so far this year, delivering an incredible 82.67 per cent to investors.
Over the same period, the IMA Japan sector average and the Topix index have returned 30.79 per cent and 30.22 per cent, respectively.
Performance of fund vs sector and index in 2013
Source: FE Analytics
Parsons says a big plus for the fund is the fact that manager Hideo Shiozumi has been at the helm since the mid-1990s.
As mentioned earlier, he believes it is important to target managers who have witnessed a number of market cycles.
He also points to the fact that Shiozumi concentrates on domestically focused small caps, which should benefit directly as the economy recovers.
Legg Mason Japan Equity requires a minimum investment of £3,000 and has an OCF of 1.96 per cent.