In July 2012*, the Premier Miton multi manager team started managing the Premier Miton Multi-Asset Global Growth Fund. This period has featured fear of EU country defaults, a massive quantitative easing programme implemented by central banks, Brexit, Trump, the coronavirus pandemic, Russia’s invasion of Ukraine, plus much more, and all the associated market volatility. Through all this, to the end of July 2022, the fund has achieved a 9.80% annualised return compared with 6.97% from the IA Flexible Investment sector since the team’s tenure.
The performance information presented in this insight note relates to the past. Past performance is not a reliable indicator of future returns.
On 1 July this year, we reached the ten year milestone of managing the Premier Miton Multi-Asset Global Growth Fund under the stewardship of the multi manager team. Over this time we have consistently applied our investment approach of blending together what the team believes are the best mix of managers, styles, sectors and thematic ideas, in delivering a diversified fund mostly exposed to global equities.
Using the flexibility of a multi asset approach, the fund is categorised in the IA Flexible Investment sector. Recent success has demonstrated the ability of this strategy to outperform the average fund in the sector, including 2021, a strong year for global equities, as well as over the year to date in 2022, a notably weak period for global equities. Real success however is best judged over a longer time span, so we are pleased to have delivered a return of 156.76% after all fees in the 10 years since we have been managing the strategy, comfortably beating the average return of 97.32% from the IA Flexible Investment sector.
During this time, the fund has been able to outperform the sector in 7 out of 9 possible calendar years, as well as in the second half of 2012 and over the year to date in 2022. This investment outcome is testament to the disciplined application of our investment approach over this time. Whilst the long term investment outcome is one that we are proud to have generated, we do recognise that any investment process will endure its own trials and encounter periods where it is tested by market conditions. We make sure we learn from these experiences, challenging and evolving our contrarian approach that has led to the superior investment outcome generated.
Our consistent investment approach
As a reminder for our investors, here are some of the main attributes of the Premier Miton Multi-Asset Global Growth Fund:
- A globally oriented multi-asset portfolio that provides exposure to a diverse range of asset classes, predominantly equities, but also including bonds, property, and alternatives.
- The primary objective is to deliver capital growth over the long-term, being 5 years or more.
- Emphasis on active fund management.
- Managed by a stable and very experienced team.
- Integrate ESG considerations into the investment selection criteria.
- Strategy employs a disciplined, value-led approach to achieve portfolio objectives.
- Regional equity weightings are tilted from a more balanced starting weight of 15% across US, UK, Europe, Japan, Asia and Emerging Market regions. The tactical allocation is capped at 30% for each region or 20% for each of Asia Pacific ex-Japan and Emerging Market equities.
- The portfolio is structurally underweight US equities in market capitalisation terms, which differs markedly from the composition of the FTSE All World Index.
- Global equity themes in the form of industry specific funds lead to the potential for further significant differences at the industry sector level versus the FTSE All World Index.
- Investment selection leads to a blend of investment styles for the majority of the time, with an occasional tilt towards value, given the relative value approach.
- Seeking exposure across the market cap spectrum with good emphasis placed on funds exposed to medium and smaller sized companies.
*Please note that all numbers in the table above have been rounded to the nearest decimal place.
The table above shows our asset allocation within the fund as at 30th June 2022.
Investors may note that we have been underweight the expensive US stock-market and overweight the relatively cheap UK stock market for some time. This contrarian position has required patience in getting its reward, something that we have enjoyed so far this year. With a higher concentration of high growth (and high valuation) companies coming under increasing pressure, the US S&P 500 Index has lost -12.81% of value over the year to the end of July. In contrast, the UK FTSE All-Share Index (with a heavier reliance on energy companies, USD earners and higher allocation to more defensive sectors) has only declined by -0.41% over the same period.
By employing an active management strategy we have carefully built our exposure to Asian and emerging market equities over the course of the last year, as lockdown and regulatory concerns of China took hold. We have started to take some of our recent gains from UK equities and have reduced the allocation to Europe given the regional mire facing it.
Given the more challenging macroeconomic backdrop and tightening of financial conditions by the central banks of the US and UK, the fund has adopted a more defensive tone since the start of the year having reduced equity exposure a little.
The invasion in Ukraine, ongoing Covid disruptions in China and other parts of Asia, and resurgent inflation fuelled by supply chain constraints as a consequence of both these events, has led the outlook to be one of increasing volatility in financial conditions and financial markets. This has encouraged us to build exposure to ‘alternative’ assets and strategies with fundamental drivers we believe will be less sensitive to the wider macroeconomic environment, be they battery storage assets, long-lease healthcare properties, digital infrastructure investments or music royalty funds.
It is our belief that the current portfolio positioning can be rewarded when investors are less driven by macro positioning and recognise stock fundamentals, favour GBP denominated assets and look beyond the mega-cap stock names in seeking returns. As such, we believe the fund is be positioned to benefit from weaker market correlations, enabling greater opportunity for us and our chosen stock-picking fund managers to outperform. In contrast, the current stance of the portfolio is likely to face headwinds when markets are driven by US equities and growth styles and more specifically during periods of strong momentum when markets have a narrow focus of support at the sector or stock level.
To all our investors and prospective investors, than you for your continued support and interest.