Tools of the trade - Quilter Investors
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UK: Suitable for retail and professional clients.
Singapore: For accredited and institutional investors.
Tools of
the trade…
May 2021 Bambos Hambi
Chief Investment Officer
As professional portfolio managers, one of the Making waves
great advantages we enjoy over ‘DIY’ investors The result of our extensive research function and our mission
to help retail investors better diversify their investments
is the extensive ‘toolkit’ we’ve developed. This means we’ve spent most of the last decade finding better
enables us to find the right strategy and the ways to capture returns from what were once exotic or hard
to reach areas.
right fund structure for every investment we
This is especially so in the ‘alternatives’ space where, over the
make, explains Bambos Hambi. years, we’ve become one of the pre-eminent UK providers of
It may sound obvious, but one of the biggest differentiators ‘cornerstone’ or ‘seed funding’ for new alternative or hedge fund
between established long-term portfolio managers like strategies, each of which provides a part of the puzzle when it
ourselves and everyday retail investors, or their financial comes to managing the risk in our portfolios and generating
advisers, is that our scale and resources mean we’ve already sustainable long-term returns.
developed a ‘tool kit’ of different fund structures, specialist A recent example is the Tages Eckhardt Systematic Short-
mandates and trading capabilities that allow us to navigate our Term Fund, a new UK launch we funded from a cutting-edge
portfolios through whatever conditions we might encounter. Chicago-based investment boutique founded by trading legend
For one thing, we can choose from literally thousands of both Bill Eckhardt. Over the past 40 years, Eckhardt has pioneered
open and closed-ended funds (namely OEICs and investment the short-term trading space and this strategy captures
trusts). To us, this is a vast universe of potential investment his approach by using advanced trading trend and pattern
strategies straddling every major asset class on the planet. recognition models across multiple time horizons. The result is
But to most private investors, it’s an almost impenetrable jungle a fund that converts the high volatility it finds in markets into a
of competing funds, confusing jargon and restrictive pricing. relatively low volatility stream of returns for our investors.
To make matters worse for the intrepid retail investor set on Thanks to our scale, we can also approach the best managers
attempting the terrain, the way is also often barred by additional in more conventional areas and ask them to create a portfolio
regulations that restrict certain investment strategies to so- especially for our needs. Over the years, we’ve commissioned
called ‘sophisticated investors’ or which require minimum the cream of the global fund management industry to run
investment levels in the millions, making them completely segregated mandates for us as one of our Global Partners.
unreachable for even the most plucky adventurers.
Continued on the following page
Stablemates A seat at the table
There are currently 17 leading global asset managers in In other situations, we’re among the first to be invited to
our Global Partners stable. Together they manage some meet with leading managers when they’re planning a new
$16trn equivalent to around a fifth of 2019 global GDP in US launch. This was the case with both the Premier Miton US
dollars). Many are among the largest, most financially secure Opportunities Fund, run by Hugh Grieves and Nick Ford, and
companies of their kind on the planet. the Premier Miton European Opportunities Fund, managed
by veteran managers Carlos Moreno and Thomas Brown.
We currently entrust our Global Partners to manage well
over £8bn1 through the portfolio solutions we offer to our Both funds subsequently became leading performers in their
investors. Our Global Partners deliver expertise in every asset respective sectors and grew to become some of the biggest
class from government and corporate bonds to commodities, funds of their ilk. Our investors shared in this success and we
precious metals and regional equity markets. recently brought Premier Miton on board as a Global Partner
allowing its expertise to percolate into other areas of our
This approach means we get to choose the best managers
portfolios.
in their respective fields, to specify the precise strategy
employed, to negotiate preferential charges and to monitor
exactly what’s happening in each portfolio on a ‘live’ basis.
Our reach isn’t limited to the UK, however. Often our
investment in an overseas strategy or manager creates the Our Global Partners deliver
economies of scale necessary to launch a new UK share
class. This was the case with the JPMorgan US Growth
expertise in every asset class from
Advantage investment strategy. government and corporate bonds
JP Morgan Asset Management runs well over 200 different to commodities, precious metals
investment strategies, but it doesn’t make this one available
to UK retail investors. However, as one of our Global Partners and regional equity markets.
it launched this strategy in the UK as the Quilter Investors US
Equity Growth Fund with Timothy Parton at the helm; it’s been
a top performer ever since.
1
Quilter Investors as at 31 March 2021
Continued on the following page
A matter of trusts These days, investment trusts have become a tactical tool that
give us something special or different when it’s needed for the
When making allocations to a wide range of different asset
right level of risk but, ultimately, they’re just one of a range of
classes, markets and strategies, an important part of the
tools we have at our disposal.
equation is finding the most efficient product structure for
the occasion. Trading up
Often the best structure for more esoteric investment areas Alongside all this we also have access to a whole ocean of
is one of the oldest, namely quoted investment trusts. The passively managed tracker funds and exchange-traded funds
recent temporary suspensions in trading, (known as ‘gating’) (ETFs), which enable us to manage portfolio costs and to take
of the UK’s largest open-ended property funds, first for Brexit tactical tilts into all kinds of markets and strategies at the
and then for lockdown, illustrates the problems inherent to lowest possible cost.
funds that invest in essentially illiquid assets such as property,
Unlike the ‘DIY’ investor, we also have a professional trading
infrastructure, renewable energy or private equity, but which
desk and access to international derivative markets. Once
still offer daily trading to their investors.
again, this provides a whole range of investment tools as using
When sentiment turns against such sectors, and investors derivatives allows us to ‘hedge’ certain risks in our portfolios,
want their money back in a hurry, the portfolio managers are such as overseas currency risks or equity market falls, or to
hard-pressed to liquidate their assets in time to meet their target very specific investment outcomes.
redemptions and the ‘gates’ are forced to close.
Essentially, derivatives provide any kind of insurance policy
This is where investment trusts come into the mix; they allow we might need, but the cover is simply too expensive, or too
us to diversify into attractive long-term growth areas like those complex, for the average retail investor to ever contemplate.
above and to harvest both the so-called ‘illiquidity premiums’
With the fate of asset markets in the year ahead hinging
they offer (without fear of suddenly being locked in) and the
on whether the economic recovery can gain traction from
extensive investment talents that reside in the investment
vaccination efforts or whether a new virus strain might once
trust world.
again overwhelm public services, triggering yet more painful
As investment trust shares are quotes on the stock market, lockdowns, 2021 looks like being a year when investors of
they offer constant liquidity – meaning they never have to every shape and size will need all the investment tools they
‘gate’ – and thanks to our investment research, we’re ideally can muster.
positioned to take ‘tactical’ (ie short term) positions in favoured
investment trusts when short-term sentiment creates new
buying opportunities.
Important information
Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them
may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit
on an investment and may lose money. The performance data do not take account of the commissions and costs incurred on the issue and redemption of
shares. Exchange rate changes may cause the value of overseas investments to rise or fall.
This communication is issued by Quilter Investors Limited (“Quilter Investors”), Senator House, 85 Queen Victoria Street, London, EC4V 4AB. Quilter Investors is
registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543).
This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal
recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any
jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information
contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document.
Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or
companies within the same group as Quilter Investors as a result of using different assumptions and criteria.
Quilter Investors is not licensed or regulated by the Monetary Authority of Singapore (“MAS”) in Singapore. This document has not been reviewed by MAS.
QIL-096-21/221-0344/May 21
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