Performance of fund over 1-yr
Source: Financial Express Analytics
Walker Crips is a small investment boutique with just two fund managers Jan Luthman and Steven Bailey who co-manage the above funds using the same investment strategy, so what has been the secret to their success? The two managers, both rated as Trustnet Alpha Managers, take a unique twist on the top down approach to asset management.
They focus on identifying, and correctly interpreting, major economic, political and social developments affecting the UK and the rest of the world. It is their belief that this "macro-thematic analysis" offers considerably greater scope to add long-term investment value than does stock-specific analysis.
As Jan Luthman explains: "Globalisation, telecommunications, economic migration, population aging, resource security, environmental concerns - these are themes of great significance, with which investment managers have not previously had to grapple. Identifying such themes, and assessing their implications for industries and investment markets, provides the framework for the construction of our portfolios.
"The result is that our portfolios are 'tuned' to the economic, political and social forces that are shaping our national and international economies."
Key to this approach is the ability to diversify and exploit global trends and themes from the relative safety of the UK markets. Indeed, Luthman said that they are actually quite bearish on the prospects for the UK economy and are looking mainly at opportunities overseas, somewhat unusually for funds that so heavily feature UK in their names. This point is an important one to note as investors looking to a UK equity fund for UK exposure are likely to be disappointed.
The three funds all have high risk adjusted returns and top ranking information ratios over both long a short periods and Luthman believes this is a feature inherent in their thematic approach: "Themes tend to emerge, evolve, interact, mutate and fade over an extended period of time, and equity markets can take a remarkably long time to incorporate the implications into valuations. By contrast, market reaction to new, price sensitive information at stock-specific level is swift, as the news is announced to all instantaneously."
The Walker Crips funds are not for everyone, however. Their unconstrained style results in portfolios that often bear little resemblance to the index and represent high conviction investments, both for the fund managers and investors.
Investors need to have a strong belief in the Walker Crips investment process as there will be times when their performance will be significantly different to that of the market as a whole. This is great in a downturn but unless you’ve fully bought into the investment process and have a strong belief in its potential, short term periods of underperformance may lead to regret and disappointment.
It is perhaps for this reason that the majority of the firm's assets under management come from institutional investors, although for retail investors looking for something different to add to their portfolio Walker Crips is certainly an interesting pick.