Himsworth: What I have learned from a decade running money
Ex-Gartmore manager Leigh Himsworth last week returned to running money with boutique group Eden Financial, following the launch of the £10m Eden UK Select Opportunities fund.
Himsworth made his name at Royal London, where he headed up the group’s UK Mid-Cap trust, before moving to Gartmore in 2009.
Here he explains how he has tweaked his investment process, what he has learnt from his mistakes, and why he will never own a UK banking stock.
Investors are spoilt for choice with almost 300 funds in the UK All Companies sector – how will your fund stand out from the crowd?
There are too many index huggers in the sector as managers think this is the best way to keep their fund diversified, but this creates so much risk for UK funds. In the UK market 50% is made up of commodities and 40% in mega caps, so you cannot risk clients’ money by tracking the index. I believe there are a number of great opportunities further down the market-cap scale, in small caps and AIM stocks, particularly in tier two oil companies and IT names, such as Cofax and SDL.
Following your brief spell out of the market is there anything you have changed about the way you run money?
The fund will be benchmarked against the FTSE All Share as opposed to the FTSE Mid 250 index because I want the composition of the weightings to change depending on which areas of the market are doing well. I have one third of the portfolio in large, mid and small caps respectively but would be willing to put it all in mid caps if I am finding a lot of value in the space.
After a decade in the fund management industry, what mistakes have you made and what have they taught you?
I have now become more disciplined and lock in profits, as opposed to holding on to a stock for a little bit too long after getting too close to a company.
In 2003 I had a 6% position in BTG group that was performing exceptionally but I hesitated about locking in the gains.
In November the share price halved, so now I will never have a position above 5%.
I am also not a believer in management meetings, as the groups just tell you what they want you to hear. If you want to do research on a company’s accounts it is easy to do from your computer.
Are there any areas of the market the fund will avoid?
We will have no exposure to overseas stocks, as with 1,200 stocks to choose from, there are plenty of opportunities out there.
Investors buy a UK fund for UK stocks and that is what they should get. Managers using the 20% overseas allocation are cheating.
I also will not own a single UK bank as no fund manager knows how to get to the bottom of their accounts. Not knowing this information means you are speculating and putting your clients’ money at risk.
I will instead be investing in asset managers, the likes of F&C Investments and Hargreaves Lansdown, which are easier to understand and which should benefit if the market rebounds.