Nevertheless, inflows into its diversified multi-asset funds, of which Birrell is lead manager, were up by 19 per cent year on year.
“What we needed was to get through probably three years of decent performance, in different market conditions, in order for investors to be comfortable,” he says.
“Also, what you’ve got to do when you’re running a range of multi-asset funds with different risk profiles is to make sure that they perform relative to each other. So in falling markets, the lowest risk one falls the least.
“In 2022 there weren't many multi-asset fund ranges that did that. We managed to do it, and it was very unusual.
“So I think that was a good reason why people took more notice of them at that point, in that the cautious one fell by the least, and the highest risk one fell by the most, which is what you’d want in that environment.
“And clearly when markets are rising, you get the reverse. There'll be shorter periods of time where it doesn’t work out, but over the long term it’s important.”
While high inflation and interest rates have tested multi-asset portfolios, Birrell predicts that focus in markets will return to fundamentals when rates begin to fall.
“There are many things that drive the price of an asset. Different factors have a different influence at a different point in time.
“But for a very long time now, it has been the macro element that has driven share prices. We saw that at the tail end of last year when the rate expectation changed. Everything moves.
“British Telecom, as far as I knew, didn't change. It was still British Telecom. Same product, same dividends, same profits, same everything; and the share price moved about 10 per cent in a few days. Nothing had changed other than a bit of rate expectation; it was nothing to do with the fundamentals of the company.
“And so what I think will happen is, as we get through this period when rates start falling, and there is evidence of this happening now already, that the focus will come back on the fundamentals.
“I think that's going to be crucial in driving asset prices. And that is something that we very much focus on within the diversified funds and what we’re doing. We’re fundamental investors.
“We care more about what companies are doing, what a company does and how it’s doing it, than we do about the influence of another factor on the share price. But that's been painful for a little while now.”
