22nd September 2011

Thames River multi-manager portfolio update

Thames River Cautious Managed

• Bought – Invesco Sterling Bond
• Sold – Legal & General Diversified Absolute Return Fund

Invesco Sterling Bond is much smaller (at around a tenth of the size of its better known Corporate Bond counterpart), has a slightly broader investment remit and is more orientated towards the management team’s best investment ideas. These characteristics, in our view, make it a more flexible proposition and therefore better able to be swiftly repositioned in response to economic and market events – a compelling attraction in today’s uncertain and fast moving markets. Having held Invesco Sterling Bond in a number of our other funds for around a decade we are very comfortable with its inclusion in the portfolio. The purchase was funded by a partial reinvestment of proceeds from the sale of Legal & General Diversified Absolute Return Trust, which has less exposure to investment grade corporate debt than Invesco. This will help to complement other strategic and high yield exposure in the portfolio.

Thames River Balanced Managed

• Bought – 24 Dynamic Bond
• Sold – Legal & General Dynamic Bond Trust

Within fixed income we continue to favour flexible funds managed by talented, experienced and proven managers and teams. With this in mind we recently established a holding in 24 Dynamic Bond, a recently launched fund managed by the seven-strong team at TwentyFour Asset Management. 

Investing across fixed income markets and instruments the fund boasts the flexible characteristics we currently favour. Importantly in such challenging markets the team aims to protect investor capital as well as outperforming the competition in relative terms. The purchase was funded from a combination of cash and by the sale of our position in the potentially less nimble Legal & General Dynamic Bond Trust. The latter remains a quality fund, but was sold as we focus on high conviction names in the portfolio’s relatively limited fixed income allocation.

Thames River Equity Managed

• Bought – Melchior North American Opportunities
• Sold – GAM Star US All Cap Equity

We already hold Melchior North American Opportunities within our Boutiques portfolio and have had no hesitation in establishing a position in Equity Managed, particularly as a buying opportunity appears to have presented itself with a recent pause after a strong start to 2011 for the fund. The portfolio targets opportunities from right across the cap scale with a clear emphasis on high conviction names. Fund manager Peter Kaye and his team actively target companies that have managed to better expectations following a period of reorganisation or restructuring – an approach that has proven capable of delivering consistent long-term outperformance. It replaces GAM Star US All Cap Equity which disappointed in performance terms of late. 

Thames River Global Boutiques

•  Bought – Cazenove UK Smaller Companies

We’ve been monitoring the progress made by fund manager Paul Marriage for some time and have been impressed with his ability to identify quality small companies that are trading at attractive valuations. And whilst much of the large cap section of the market remains attractive, we feel that the time is right to establish a position in Paul’s fund in part due to its relative resilience in August. As well the inherent potential within many of the positions we are also positive on the role merger & acquisition can play in this area of the market, particularly as larger companies look to supplement organic growth through corporate activity. 

Rob Burdett and Gary Potter
Fund Managers

Investments