Q: It’s been an incredibly unusual year for investment managers but what has been the biggest challenge for you and the team over the past year?
Frank Atkins: I’d say that the biggest challenge for us has been in the portfolio management side, in how we’ve actually managed the investments and rebalanced the managed portfolios over the year.
Thinking back to markets in 2020, growth investment was the best performing area. That was very beneficial for us because we have had a long-term preference for thematic equities and we’d invested in the likes of technology, health care, sustainability funds, global smaller companies etc. All of these performed incredibly strongly during 2020 and so contributed to excellent performance numbers for us. Our strategies posted some terrific performance both on an absolute and a relative basis in 2020.
2021 has been different – it’s been a year of transition between investment styles. We saw strength in both growth and value at the start of the year, with the rollout of the vaccinations which sparked hope for a somewhat synchronised global economic recovery. This meant that certain areas of the market that had previously been completely unloved during 2020 began to perform very well. We had been historically underweight in those areas so it was very important that we were able to react quickly, rebalancing the portfolios in accordance with the changing economic environment. It’s all well and good performing very strongly in one particular period, but you don’t want to give that performance back.
Consolidation of the portfolio performance this year has been a key success. We did it in two ways. Our asset allocation committee, which is a real strength here, provided very comprehensive guidance as to how we should change the asset allocation. The first way earlier in the year was an increase in the ex-Japan equity allocation. Earlier this year, we saw a cyclical recovery in Asia ex-Japan driven by Chinese economic growth. So that was one area that we looked to rebalance. The second one was in UK equities. Looking at the composition of the FTSE 100 in particular, there are a number of companies operating in sectors such as financials, energy, commodities, those kind of cyclical sectors which are which are linked to a global economic recovery. They began to perform well in the first six months of this year. It was those asset allocation changes that we made which consolidated the strong returns from 2020 and we’ve managed to keep that up this year.
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