Personal Finance: `It's Been a Stormy Ride, but There Is Light Ahead' ; the Manager of a Pounds 2bn Investment Fund Tells WILLIAM KAY of His Battle with Turbulent Markets and of the Troubles He Faced after September 11

By Kay, William | The Independent (London, England), August 24, 2002 | Go to article overview
Save to active project

Personal Finance: `It's Been a Stormy Ride, but There Is Light Ahead' ; the Manager of a Pounds 2bn Investment Fund Tells WILLIAM KAY of His Battle with Turbulent Markets and of the Troubles He Faced after September 11


Kay, William, The Independent (London, England)


Despite what investors have already suffered this year, we still face a very bumpy stock market ride, a chastened Jeremy Tigue says. He admits he underestimated the pressure on banks and insurance companies not to buy shares this year but still hopes for an upturn by Christmas.

Mr Tigue runs Foreign & Colonial Investment Trust (FCIT), which started the investment trust movement 134 years ago to enable "people of modest means" to participate in the stock market and is now the biggest of its breed. His role means Mr Tigue bears not only the weight of history but the responsibility for continuing an impressive performance stretching back at least to the end of the Second World War.

In the past year he has fought a remarkable rearguard action: while the FTSE 100 index has fallen more than 40 per cent, FCIT is only 25 per cent off its year's high. As a long-standing FCIT shareholder, I believe that is a creditable achievement, especially for a fund worth pounds 2bn which is difficult to turn round quickly and is bound to hold a good chunk of blue chips in a portfolio spanning 500 companies in 30 countries.

Mr Tigue admits he was over-optimistic about market ability to recover from the shock of 11 September. He says: "My mistake was to assume the boost to liquidity by the central banks in the wake of those attacks would work its way through the system. It didn't. We thought there would be a global economic recovery, but that Japan would remain mixed this year. So it has, but there have been acute problems elsewhere. I think the market indices will go all over the place, so we are trying to find the individual companies that will do well.

"The key thing that has made FCIT successful has been continuous adjustment to changing market conditions. Most importantly in the present climate, it's very unlikely that FCIT will run out of money, but a lot of institutions have been forced sellers. I feel very strongly that we have to run FCIT so it is never in the situation where we cannot invest because we have run out of money and the banks won't lend us any more. That is what has happened to the split- capital investment trusts, and it is the worst thing that could happen to any investment trust. We are making sure we have enough bank facilities in place to invest if the market falls another 25 per cent."

But having the money in the locker is one thing: it is quite another to make sure that money is invested wisely. Mr Tigue, who inherited his basic approach from his legendary predecessor, Michael Hart, uses a classic "top-down" method to allocate resources, then identify promising shares.

He says: "Our investment process is based on geographical teams, not global sector themes. We have a UK desk, a US desk, an Asia desk, a European desk and various emerging markets desks. They are buying and selling stocks, and each of their performances is judged against a benchmark. In terms of constructing an overall portfolio, those individual teams are feeding into a monthly process of asset allocation. Each team produces a monthly report about each equity market and they have a checklist: valuations, political situation, supply of and demand for equities, market sentiment. We try to score each of these elements, so we end up with a score for each market, and they each make a forecast for equity return over the next 12 months. The problem is to get that done on a consistent basis, because some teams are more optimistic than others, but we allow for that.

"Once a month, on a Monday, we have a discussion with all senior fund managers, and people from our bond and strategy teams.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Personal Finance: `It's Been a Stormy Ride, but There Is Light Ahead' ; the Manager of a Pounds 2bn Investment Fund Tells WILLIAM KAY of His Battle with Turbulent Markets and of the Troubles He Faced after September 11
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?