Judging a Fund or Fund Manager

As an investor, you want your Fund to perform. As an advisor or wealth manager to your clients, you, of course, want a Fund that has done well and to have a reasonable expectation that this performance will continue. What do we want? We can assure you: we want the same!

Take 2019 as a case in point. Our returns for the 12 calendar months, in sequence, were : 7.86%, -1.10%, -1.76%, 10.89%, -0.59%, -0.66%, -2.18% -3.62%, -0.84%, -0.07%, 5.17%, 7.82%. We lost money in 8 months of 2019 but our overall return for calendar 2019 was 21.56%, with 13.0% of this return being delivered in the last two months of the year.

Of course, we would have preferred a smoother ride but that is not how equity markets work. Churns and turns are integral features of this game and it is necessary to have a strong stomach when investing in equities. In fact, you can almost certainly expect more volatility in 2020. But that shouldn’t bother any long-term investor – markets go up and they go down. If we are mindful, we can use this volatility to our advantage; allowing the market to serve us, rather than being slaves to its senseless daily gyrations. Our task is to invest in good businesses that are growing and providing real solutions to customer needs. If the business does well, we would expect the stock price to take care of itself. Over the long term, stock prices tend to track earnings fairly well – but rarely does this occur in a straight line.

Our cocktail formula is: Buy great businesses at sensible prices. Then hold onto them.

Because the market is inefficient, it takes time for mispricings to correct. However, we are perfectly prepared to wait for this re-rating when we are sitting on a portfolio of high quality businesses. Over the last 10 years, our patience has been well rewarded, as shown in the chart below:

  

10 Year Returns

  • Our Fund:                  363%
  • FTSE Small Cap:     180%
  • FTSE All Share:        121%

In pounds, shillings and pence……a sum of £1,000  invested on 1st January 2010 would now be worth:

  • Our Fund:                    £4,630
  • FTSE Small Cap:        £2,800
  • FTSE All Share:          £2,210

All return calculations are for the 10 year period from 31-Dec-2009 to 1-Jan-2020

Source: FE Trustnet

Privacy Preferences
When you visit our website, it may store information through your browser from specific services, usually in form of cookies. Here you can change your privacy preferences. Please note that blocking some types of cookies may impact your experience on our website and the services we offer.

Disclaimer

It is the responsibility of the individual user to consider his or her legal and regulatory position in the relevant jurisdiction, the risks associated with trading such products and to ensure that the use of the content and the subsequent making of any investment does not contravene any such restrictions or applicable laws and regulations of any jurisdiction. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific security, index, report, opinion, advice or other content. This does not exclude or restrict any duty or liability that Sterling Investments Management Ltd has to its clients under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system under the laws of applicable jurisdictions.

Sterling Investments Management Ltd, its subsidiaries, associated entities, directors, employees, representatives or suppliers will not be liable, on any grounds whatsoever, contractually or not, for any direct or indirect damage that may arise as the result of it being possible or impossible to gain access to this site, the accessing, visiting or use of this site and/or the information provided, the sending, or receiving of information via this site and/or the operation or non-operation of this site, except in the event of intentional or serious blame on its part. The information contained on this site, including any third party data is published in good faith and Sterling Investments Management Ltd believes that the information is accurate at the time of publication but no representation or warranty, express or implied, is made by Sterling Investments Management Ltd as to its accuracy or completeness and it should not be relied on as such.

Sterling Investments Management Ltd shall therefore have no liability, save for any liability that Sterling Investments Management Ltd may have under the UK Financial Services and Markets Act 2000, for any loss or damage arising out of the use or reliance on the information provided including without limitation, any loss of profit or any other damage, direct or consequential. Nor will Sterling Investments Management Ltd, its subsidiaries, associated entities, directors, employees, representatives or suppliers be, under any circumstances, liable for any corruption of data that may occur as the result of technical problems (e.g. transmission errors, technical failures, breakdowns, intervention of third parties, etc.) and/or for any damage or loss relating to software or hardware that is the result of any virus, defect or malfunction in relation to access or use of the site.

Our website uses cookies. By continuing to use this website you agree to our cookies policy. Find out more under “Terms of Use” which you will find at the bottom of the website. Sterling Investments Management Ltd is not registered as an investment advisor with the SEC and therefore this website is neither directed at nor intended for US investors. Before you proceed kindly confirm you are not a US person.

SUBSCRIBE TO OUR NEWSLETTER

To receive Fund updates including investment philosophy of some outstanding investors such as Buffett, Lynch and Munger please submit.

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Sterling IM will use the information you provide on this form to be in touch with you and to provide updates and marketing.