At an event in London yesterday, Chris Godding, chief investment officer, said the number of managers had been significantly cut to “focus on picking the best, rather than this scattergun approach”.
Godding explained that the decision was down to manager performance and was not a cost cutting exercise.
He said: “Like any industry or any profession, there are some very talented people and the vast majority are quite mediocre. Many active managers don’t outperform so finding the managers that do is a fairly easy task.
“We took the decision that we want to make fewer decisions but better decisions,” Godding continued. “We want to see higher quality and consistent returns from our managers. And all we’ve done is essentially eliminated the low-hanging fruit.”
Commenting on his background as a fund manager, Godding, who joined Tilney last year, said: “As a fund manager myself, I like to run a portfolio of 30 stocks beacuse that’s all I could have the bandwidth to cover really. So, once you see managers going in to 80 to 100 or 120 stocks, you think, ‘how can they possibly know what’s going on in 120 companies?’
“The more concentrated you are, the more you know about the managers. The more you know about their strategies, the more comfortable you feel with them when they underperform over a quarter.”
Meanwhile, Tilney managing director Jason Hollands added that the reduction was also down to the merger with Towry and Ingenious.
He said: “All three of those legacy firms have slightly different funds within their portfolios – so we needed to nail down to the very best ideas.”
Tilney said they’ve seen some very good returns off the back of it and have also reduced their coverage list from 500 funds down to 130 respectively.
adkinson@private-capital.com.hk says:
Incredible, wonder if they have ever thought of googling ”DIVERSIFICATION”?