Quality Managers Matter: How we find them when selecting funds

Tracy Zhao, Investment Research Analyst, gives a brief look into qualitative aspects of the Fund Selection Process.

Article updated: 26 June 2019 3:00pm Author: Tracy Zhao

When it comes to selecting investment funds, no one would deny that performance is one of the most important parameters. Behind all the ratios, charts and graphs, there are fund managers who are ultimately responsible for the delivery of returns for investors. As part of our investment research process, we meet these managers, we listen to them explain their strategy, market outlook and portfolio positioning etc. Most importantly, we want to be certain that we and our investors would be comfortable to allow these managers to look after our money.

During the past two weeks I have met a few fund managers; some of them have left an impression on me, together with the impressive results of the funds they manage, and so I thought I would share those experiences with you.

Buffettology Breakfast

My meeting with Keith Ashworth-Lord, the manager of CFP SDL UK Buffettology Fund, was over the breakfast table, for convenience, as his office is in Manchester and we were meeting in London. He introduced the fund to me whilst having a pot of tea and toast with marmalade. Speaking softly, he explained his investment approach: to invest in companies with a strong franchise at a discounted price and to hold those investments for a long time, which sounded as simple as his breakfast. To answer my question of how to find such companies, he explained that he looks for those that had pricing power, predictable earnings, strong free cash flow and management who could deliver a return on capital.  As an award-winning stock picker, Keith did not shy away from talking about stocks that were not success stories, a comfort for me to hear. His method has been working and this fund has almost tripled the return of FTSE All Share over the past 5 years. 

A wealth of experience

When Nadia Grant walked into the boardroom, I could not help thinking that she was too young to be the head of US equities and running four US strategies in Threadneedle. Soon I realised that I could not be more wrong. Before joining the company in 2014, she had worked at JP Morgan Asset Management for 13 years, almost 20 years in the business already. Her sweet French accent brightened up the presentation of her fund, Threadneedle US Equity Income, making the journey to London on a rainy day worthwhile. She explained that her strategy was to invest in companies that were paying a growing dividend or had demonstrated the ability to do so; a key potential to accumulate wealth for investors. When asked how to outperform the already pricy US stock market, Nadia’s eyes lit up and her answer was firm. She said that market was inefficient due to investors’ behavioural bias from which the ‘alpha’ could be generated, reflected by the fund’s YTD total return when compared to S&P 500.

‘Defensive Growth’ from across the world

On the train to Liverpool Street, I was preparing myself to meet an alpha male type portfolio manager. Shane Hurst, manager of Legg Mason IF RARE Global Infrastructure Income Fund, surprised me with his openness and warmness, typical traits of an Oz. Based in Sydney, he travelled to London to give feedback to as many fund investors as possible in a short stay. He explained that the portfolio could be seen as a ‘Defensive Growth’ asset, providing growth with a defensive tilt by investing in the listed companies that had infrastructure assets. He won me over by his detailed description of his stock selection process and the performance resulted from his selection.

Of course this is not the only part of our selection process but it is important part of our due diligence and qualitative process.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Tracy Zhao

Investment Research Analyst & Trainee Investment Manager

Tracy has a master’s degree in Financial Analysis & Fund Management, and a background in financial services and auditing. She supports our Platinum 120 preferred range of funds and works closely with our fund managers, undertaking fund research, analysis and MI reporting.

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