Investec’s Mundy finds triumph in diversity
Investor's view: Alastair Mundy, equities manager, Investec Asset Management
It is not often you hear fund managers say they are happy to have poorly performing companies in their portfolio. But Alastair Mundy does not call himself a contrarian investor for nothing.
He said: “At any one time you want some stocks that are doing well, some stocks that are doing badly, and some that are asleep. The majority of investors seem to want everything in their portfolios to be going up at once. But if they are all going up together, then they can all go down together too.”
Diversification is what has put Mundy’s fund at the top of the performance tables in the past year – his Investec UK Contrarian fund is ranked first of 100 competitors in BNY Mellon’s Caps survey of fund returns during the 12 months to June 30.
Over that period it grew by 3.3%, making it the only one with a positive return. Over five years it has made 5.5% and is ranked 11th.
Mundy has managed to outperform while the market was tanking last year, and again while it recovered this year: a rare feat among his peers.
Defensive stocks such as GlaxoSmithKline and Unilever helped preserve capital on the way down, while Signet Jewelers and housebuilders Travis Perkins have pulled ahead in the rebound.
Profiting from both was no piece of exquisite market-timing, however. Mundy says his typical holding period is several years and his portfolio usually contains a mix of defensive and aggressive stocks, though it is currently positioned more in defensives, having taken profits on holdings such as Next and Carnival following the rally.
Mundy said: “Travis Perkins is the perfect example of a company I love to own. It’s a great company with the highest margins in its sector, but last year, the market decided that the next six-to-nine-month period was going to be really bad, and it was not willing to accept the potential volatility over that period.
“We take the view that we just don’t know what is going to happen over the next six to nine months, but in the longer term, this company will do well. And it was a cheap bet for us, because we were buying when everyone else was selling. That is what fund management is about; making cheap bets.”
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