Of course, building the core of solid investments is one thing, while adding value above that is more difficult and is a result of the research and portfolio construction process. Recently I’ve been buying into the areas of technology, biotechnology, and pharmaceutical funds. These funds are pretty rare in the UK, primarily because many of them were launched at the end of the 90s and fell during the hard times that followed. One of the funds that I own is quite heavily weighted to the US market because that’s where most of the technology companies reside.

With the performance of the NASDAQ and the TechMARK in the UK being absolutely dreadful, I believed that the downside and the discounts were overdone. That’s why I increased the efforts on researching these businesses. Some of these companies show encouraging signs in terms of growth; corporate spending on technology has started to pick up. I just felt that because everyone was so negative on the asset class, it required further investigation. With that strategy I tried to add to the growth orientation of the portfolio.

Q: Would you explain your portfolio construction process? How many investments do you usually have?

A: I have increased the number of holdings since we started the fund with the idea to cut down my stockspecific risk. Although it is not a massive fund, it has grown a lot over time. I still don’t have liquidity constraints because I’m not a trader, but I feel that there have been a lot of investment opportunities recently, so the number of securities has increased a little bit. It is still between 30 and 50, but I’m at top of range at the moment.

I mentioned earlier that from about 250 conventionally structured investment companies, probably only 30 are worth buying. There may be a few more, but they won’t be funds for all seasons as some of them will be too growth or value oriented. I’m always concerned not only about the right decisions at the top end, but also about not holding securities at the tail that are going to harm the portfolio disastrously. So, the investors receive a portfolio that is well diversified by asset class and geography, and consequently, should be able to sleep at night.

Q: What are your views on portfolio risks, sector risks, and security risks and how do you manage them?

A: Most of our investors are based in the UK. They are trying to make a decent return on capital but, above all, they are the type of investors looking for long-term investments for their pension fund. Their ultimate liability is going to be closely related to the performance of the FTSE All Share Index, so I feel that I have some responsibility to have a fair proportion of the assets invested in the UK from a currency and economy point of view.

But at the same time, more than 50% of the fund would typically be invested in funds that invest in America, Asia, or the emerging markets. Ultimately, I’m going to be judged against the All Share Index and against other fund of funds, but with the globalization of the equity markets, I don’t have to worry too much about that.

I minimize risks through backing those core long-term holdings and through diversification. That strategy lowers the risk relatively to any index. I’m not saying that it won’t go down if the market crashes, but it has a lot of defensive qualities because it is backed by assets. Overall, this is a fund that I’m very proud of it terms of performance. There’s a personal investment in there and I’m determined to try to deliver that little bit of extra return. And I thoroughly enjoy doing it.