Yahoo Finance 'Chinese tech stocks made us money despite the Covid-19 market panic', says £1.4bn fund manager
Picking where in the world to invest has been particularly important this year. British stocks have been disastrous, with a fall of 17pc, but markets in China and America have made strong returns.
Getting the balance right has been tough. The Bankers Investment Trust has more than a fifth of its money in Britain, far more than this country’s share of global markets. Despite this “home bias” the £1.4bn trust has managed to beat those global markets so far this year.
Its manager, Alex Crooke of Janus Henderson, tells Telegraph Money how the trust is managed, about the challenges he has faced working from home during the lockdown and how he expects markets and the economy to behave.
What makes you different?
We seek long-term returns by buying great companies and sticking with them. The key is to buy businesses where we can see both earnings growth and an increasing dividend over the long term.
Each region in which the fund invests is managed by a different Henderson fund manager, who picks 20 to 30 stocks. My job is to decide on the trust’s “gearing” [how much debt it has] and how much money to allocate to each region.
Who is the fund for?
Investors typically begin with British shares, as it is what they know. The next stage is to add global diversification to their portfolio and our trust is often an investor’s first step into the international market. We hold hundreds of stocks so we give investors access to markets from across the world.
What has driven the trust’s performance this year?
The only two markets up a lot this year are China and the Nasdaq [America’s technology market], although shares have now recovered in most parts of the world. These two markets have done particularly well as they are both heavily exposed to technology. The pandemic has accelerated those trends that help technology shares, such as online shopping, software that connects people and gaming.
We have a position in China as well as a broader allocation to Asia, which is quite rare. Local Chinese brands have been growing particularly quickly and taking market share from their international rivals. Our investments in this market focus on consumer goods and the growing wealth of the middle classes.
How do you expect markets to behave over the remainder of the year?
The key to markets getting back on track will be a coronavirus vaccine. However, I don’t think we will have another economic slump in the near future because we are seeing signs of recovery from the recession during the first six months of the year.
The biggest risk to markets is that inflation comes roaring back as central banks and governments spend unprecedented amounts of money to revive economies. Inevitably this means the money supply rises and possibly, in due course, the price of goods.
How have you found working from home in lockdown?
We already had the technology for trading and researching but not for video calls, so we needed headsets and other bits. Companies have been very open with meetings and online calls. In fact, access to their management has been better than normal.
What have been your best and worst investments?
Cranswick, the sausage maker, was our best. We paid around 300p a share for it when we first bought it. Now the price is nearer £37. The company has built itself largely without acquisitions, exactly the sort of stock we look for.
The worst was London Forfaiting, a specialist finance company. When things go wrong in finance, they go very wrong very quickly.
We bought at around 300p in the late-1990s and it was taken over at 30p in 2003. The lesson I learned was to check carefully that invoices are being paid on time.
How are you paid and do you own the trust?
It is the largest investment for me and my family. I’m paid a salary and bonus, which is based on our performance over three and five years as well as how we have performed in partnership with others.
What would you have been if not a fund manager?
I studied astrophysics when I was at university and really wanted to work on telescopes in Hawaii. I still haven’t even been to Hawaii.
