Bambos Hambi, who runs 30 risk-targeted multi-manager funds for Standard Life Investments, is well-known for his stellar long-term track record.
Since he started at the company in 2011, the manager has outperformed his peer group composite more than seven times over to deliver a return of 25.88 per cent, while sticking within frameworks that seek to keep volatility and downside risk in acceptable boundaries.
Performance of manager vs composite over tenure at SLI
Source: FE Analytics
Now that we’re approaching the five-year anniversary of his MyFolio range, the head of fund of funds management (pictured) is looking back over his investment process and how he has managed to maintain performance across his suite of funds. 
“When we’re looking at funds we’re looking for robust repeatable services, hence why we’re looking to deliver exactly the same thing for our clients and customers,” he explained.
“Our universe consists of 8,700 funds, and there are substantially more funds than there are UK equities out there. Even as a team of 11 we can’t possibly go round looking at 8,700 funds so we try to look at the top 10 per cent.”
“We have a quant system – we are looking at risk and return to reduce that universe of funds to a manageable number. Then we apply the’ five Ps’ framework, which is always in the following order: philosophy, process, people, performance and price. That gets us down to around 80 different funds.”
In the article below, Hambi and SLI investment director James Millard talk through the funds out of these 80 that the team are particularly pleased with.
Managed by Andrew Rose since 2004, Schroder Tokyo has delivered top-quartile returns over five and 10 years and has outperformed its average peer in the IA Japan sector by 20.9 percentage points over the last decade, providing a total return of 59.54 per cent.
Performance of fund vs sector over 10yrs
Source: FE Analytics
“Andrew Rose and his team at Schroders are outstanding Japanese managers and we’ve been holding them in the fund since launch,” Millard said.
“In 2013, however, we viewed the Japanese yen as highly likely to depreciate versus sterling, so we took the view that we wanted to invest in a yen-hedged currency share class.”
“We took that position in our portfolios until our tactical view changed when we reversed that in the February of this year. Over that period of currency hedging we added a further 20 per cent of returns over and above those – that was achieved holding Schroder’s portfolio unhedged.”
“I think it’s a great example of where we’ve not only added value through the manager selection process but through smart implementation and using our tactical view to its best [ability].”
While the fund has performed well over the long term, its performance dropped to the second quartile over one and three years and then to the third quartile over three and six months.
Despite this, the £2bn fund has achieved a top-decile annualised volatility and maximum drawdown over Rose’s tenure.
Schroder Tokyo has a clean ongoing charges figure (OCF) of 0.92 per cent.
Hambi and his team have been long-term supporters of manager Cormac Weldon for a number of years and, when MyFolio was first launched, used Threadneedle US Select as its core US fund.
When Weldon and seven out of eight of his team members decided to move to Artemis 18 months ago, Hambi decided to follow the team to its new investment house.
“We immediately sold the Threadneedle fund, we parked the money in a US tracker for a number of months until the team were in place and had launched their new fund,” the manager explained.
“We met the team three times over a couple of months to make sure that the philosophy and the process were consistent with what they used to do and that there were going to be no surprises, and I’m pleased to report that a year later, the fund is comfortably outperforming the S&P 500.”
A lot of investors opt for trackers over actively-managed US funds due to the efficiency of the market, which means it is difficult to outperform the index.
However, since Artemis US Select’s launch less than a year ago it has already tripled the performance of its benchmark and has provided a total return of 12.19 per cent. This is also more than double the performance of its peer average in the IA North America sector, which has returned 6.07 per cent.
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
The fund’s largest weighting is in the consumer sector, holding giants such as Apple, Amazon and Estee Lauder in its top 10 holdings – these form part of the fund’s 59.3 per cent weighting in large-caps.
Artemis US Select has a clean OCF of 0.91 per cent.
Standard Life Investments Global Absolute Return Strategies
The behemoth Standard Life GARS fund, which is currently more than £26bn in size, has built up a strong record since its launch in 2008, providing a return of 53.08 per cent and outperforming its sector average by 29.95 percentage points.
Performance of fund vs sector since launch
Source: FE Analytics
Millard said the fund is one of the reasons why Hambi’s active-based MyFolio Multi-Manager funds have performed more strongly than the MyFolio Market range, which only invests in trackers and can’t hold absolute return products.
GARS has been awarded an ‘A’ rating from the research team at Square Mile for its highly diversified portfolio and the fact it will have between 20 and 30 broad investment strategies running through it at any one time.
“There is much to like about the risk return profile of this fund. The fund was originally set up to cater for SLI's in-house pension fund and it is designed to produce equity like returns while insulating the fund from the full volatility of the equity markets,” the team said.
“SLI have bought and developed a range of sophisticated risk systems which considers the investment threats through an array of different approaches, nevertheless, investors should be mindful that no approach is infallible, especially when assessing such a broad and complex basket of investments and derivatives.”
Standard Life GARS has a clean OCF of 0.9 per cent.