Rated Fund 2015-2017. An unconventional approach to investment
This fund was highly commended in Money Observer's 2016 fund awards. It has a different approach from many in its peer group. First of all for its managers, Jeremy Lang and William Pattisson, choosing the best shares is all about minimising risk rather than looking for maximum rewards. Their aim is to invest in safe growth companies globally.
They also combine conventional investment in shares with derivatives. The long/short ratio is 150/50, which means they can invest say £100 conventionally, sell £50 of shares they believe will go down in value and use the proceeds to buy another £50 of stocks.
In order to choose which stocks to buy and which to sell, Lang and Pattisson are always looking to take advantage of situations where they believe others in the market have got things wrong. For them the market consists of three sets of people - investors, financial analysts and company managers. They watch the behaviour of these people for signs of bias.
Investors, they think, are prone to overreaction, so they look for stocks with unusually high levels of anxiety attached to them. They believe that analysts, on the other hand, are more likely to under-react, so they study past forecasting patterns.
They exclude any stocks where management behaviour looks excessively risky. Stocks that have not been rejected through this process are assembled into a portfolio. All stocks in the portfolio are then equally weighted and rebalanced every three months.