Asset Allocator recently caught up with Chris Metcalfe, chief investment officer at Iboss, and the Yorkshireman’s message at a time of marked uncertainty in markets is to “stay humble".
He likes allocating to global equity funds and strategic bond funds, and to managers with experience.
Metcalfe said: "We wouldn't want to say we know better than, for example, James Thomson at Rathbones, when it comes to allocating to different equity markets.
"He has been doing it for over 20 years and has a very strong track record; we aren’t going to say we know better than him."
Thomson's fund, Rathbone Global Opportunities, is £3.98bn in size and is owned by two of the allocators we monitor. It has returned 20 per cent more than the IA global sector peer group over the past five years.
He has also decided to stick with another of the global funds he owns - Aviva Global Equity Income, a high-performing mandate but one that has seen the exit of the lead fund manager Richard Saldanha and his team.
Metcalfe says he has met the new managers and is happy to stick with it for now.
Concentration risk
Much debate in markets right now centres on how best to get exposure to the US, where concentration risk stalks portfolios.
Metcalfe has tweaked his approach here.
Where once he got his US exposure primarily through global funds, he now has a separate allocation to the world’s largest equity market.
Some 50 per cent of his exposure is in a tracker, and the remainder split between M&G’s North America Value and Federated Hermes Small and Mid Cap US equity fund to provide exposure further down the market cap scale.
Metcalfe says the former fund may have underperformed relative to some peers but "the data won’t have been kind to value funds in recent years".
When it comes to UK equity exposure, he is also focused on funds firmly in the value cap, but also draws a line from the period of the Truss "mini-budget" to today, to help him understand which UK funds can perform well when economic turbulence is afoot.
Among the UK funds Metcalfe favours, with this in mind, is the Polar Capital UK Value Opportunities fund run by George Godber and Georgina Hamilton, the Man GLG Undervalued Assets fund and the Gresham House Multi-Cap Income fund, the latter being a more growth-focused fund than the other two.
Man GLG Undervalued Assets was once one of the most popular UK growth equity funds in our database but in recent years allocators have not been taken by manager Henry Dixon's deep value approach - perhaps out of scepticism that the UK economy faces a strong rebound.
Ultimately this means only four allocators, including Iboss, now hold the fund.
However Meltcalfe's combination of this fund with the more safety-first, quality value Polar Capital fund - plus the growthy Gresham House fund - means he has spread his bets across many horses.
