Gray, who left Miton Group in June but is unable to participate in Coram activities until 1 January 2015 due to restrictive covenants, will take up a position as director and senior fund manager.
Gray will oversee multi-asset portfolios in Coram’s UCITS IV fund range alongside Sullivan, also a director and senior fund manager at Coram, with whom he shares a seven-year working relationship.
Sullivan said that Gray’s methods tie in with Coram’s hands-on approach and overall investment outlook.
“We pride ourselves on our enthusiasm to get out of the office and see clients,” he explained. “Whether it is the one-man band in the high street or a national network of independent financial advisors, they get the same level of attention.
“We’ve always believed that asset allocation drives the returns on the portfolio. It’s very important to get the top-down right. If it’s not right, it doesn’t matter how good a stock-picker you are – you will not add alpha to a portfolio.
“We manage our money using economic data as the barometer for stock market success. We don’t sit passively on equities – we will shift significant allocations away from equities if we think markets look overpriced. It’s very much an active approach to asset allocation, not stock-picking – that’s the big difference.”
Laith Khalaf, analyst at Hargreaves Lansdown, added: “Martin Gray and James Sullivan have a great track record of protecting investors on the downside, while delivering excellent long term returns. Funds of this sort with the longevity of this management team are few and far between, Troy Trojan and Newton Real Return spring most readily to mind.
“In hindsight, Gray and Sullivan’s strategy was probably too defensive over the last few years, but their long term track record remains admirable. We look forward to discussing their fund launches with them in due course.”
It is along this line that the as-yet-unnamed UCITS IV funds will be managed, and while there are currently no concrete plans, Sullivan said that there is a view to adding an investment trust to the Coram arsenal.
“We would like to move into owning an investment trust,” he said. “It’s something we think we could deliver on. We could either buy one, depending on what is available, or set up our own depending on our clients’ appetite. It is possible in the first year, but it would be a bonus rather than something we are accounting for.”
Asked what regions he favours at the moment, Sullivan said: “We’ve been fans of Japan for a long time. We have had to be very patient with that because it only came when the Bank of Japan started their version of QE. From a prices and a price-to-book perspective it still looks undervalued.
“We would certainly be favouring Asian economies, both Japan and Pan-Asia, over developed Western economies. We would be long in Japan and Asia and much lighter in Europe and the US.”
Sullivan highlighted the US dollar as likely to account for the majority of the portfolio weighting, with cash transactions also on the list of possibilities.
“From a different asset class perspective we like the dollar and dollar-denominated assets,” he said. “The portfolio is likely to have a weighting towards US dollar. We view currency like we view any other asset class, it is integral to portfolio performance.
“We could buy dollars as a cash transaction, or we could buy US equities. Although we perceive US equity as expensive, the dollar would act as a safety net if the equity fell because chances are the dollar itself against the sterling would strengthen.
“It has been frustrating sitting on the side lines watching [the dollar strengthen against sterling] knowing it is something we would have had in the portfolio.”
