New funds regularly appear promising better returns than older funds alternatives. However, fashionable strategies do not always deliver outperformance and it can pay to back longer-running approaches.
In the latest edition of ‘Selector Snapshot’, one investment professional shares the companies and funds he has stuck with for the long haul.
Selector: Dietmar Herbach
Company: Herbalytics (Germany)
I like to stick with managers if things are going well. If they provide good service, good numbers and resources and don’t have too many assets under management for the capacity that they have, then I like to stick with them.
There are a number of managers that I have worked with for over 10 years. There is a difference between mutual funds and washing powder. With washing powder I believe newer products will be better.
With mutual funds I am happy when they have a good 20-year track record and I understand how the fund is being run, such as how it will be managed when it is underperforming and when it will deliver good performance over the whole cycle. That is an advantage compared to a new fund.
Comgest has a quality growth equity business and their European equities fund has been on my recommended list since 2004 over four employers.
In my opinion, fixed income is a coupon clipping game. I don't think that the spreads will decrease further. There is pressure to get good yield and in investment grade you cannot get it any more. The demand is still there but spreads are relatively low.
The good thing about it is that you do not have too much duration risk. If I can, I put it in portfolios to bring my duration risk down without getting too few coupons.