Multi-Manager

Return to form - bouncing back strongly

Consistency is something that always sits front and centre of our thinking.
May 2021

Risk Disclaimer

Please note that this is a marketing communication and does not constitute investment advice or a recommendation to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination. Views are held at the time of preparation. Past performance is not a guide to future performance. Stock market and currency movements mean the value of investments and the income from them can go down as well as up and you may not get back the original amount invested.

Return to form

Consistency is something that always sits front and centre of our thinking. Why? Because it is a key trait given our ambition of delivering outperformance to our clients – something we aim to do by building balanced portfolios comprised of individual funds run by talented managers.

Time not timing

Consistency is a big part of how we select managers – we don’t pick them based on a good 3, 6 or even 12-months performance but target those capable of achieving outperformance over meaningful time periods. By that we mean 5 years plus – a perspective perfectly aligned with our view that it’s time in the market not timing that really matters.

 
Identifying drivers of consistency

Our process delves deep into what makes managers consistent. We look at their philosophy, the approach employed, the wider team and the environment they work in amongst other things. If all these factors have combined to contribute to a strong track record, then assuming they ‘act in the same way over time’ there’s every reason to believe they’re well placed going forward.

 
An elusive characteristic – thinking about the bigger picture

Consistency of performance delivery is an elusive characteristic however, and as evidenced in our BMO MM Consistency Ratio (read the latest Fund Watch to find out more) very few individual funds beat their peers on a regular basis. Combining individual components within a broader ‘fund of funds’ portfolio can help counter this but it’s important to remember that all managers inevitably go through periods in which their approach faces broader headwinds as a result of economic events or market themes for example. Challenging times don’t mean that their talent has evaporated and assuming the approach that’s served them well historically continues to be implemented there’s every reason to believe that a return to form will happen. Crucially, when it does it can be a rewarding period in which to invest with them. From our perspective as a portfolio manager we’ve often enjoyed a prolonged period of ‘bounce back’ post the few episodes of under performance as a number of our individual components ‘return to form’.

 
We’re no different

We’re proud of the track record we have built over the 25+ years together and over longer periods the strength of our performance increases.

The Navigator Range's strong risk reward increasing overtime

Source: LIM. % average of 1,3,5 and 7 year periods the Navigator Fund range outperform. 31-Dec-08 to 31-Dec-20. For illustrative purposes only

Risk Disclaimer

Please note that this is a marketing communication and does not constitute investment advice or a recommendation to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination. Views are held at the time of preparation. Past performance is not a guide to future performance. Stock market and currency movements mean the value of investments and the income from them can go down as well as up and you may not get back the original amount invested.

Use our handy glossary to look up any technical terms you are unfamiliar with.

The Navigator Range's strong risk reward increasing overtime

Source: BMO Global Asset Management, as at 31-Mar-21
Past performance should not be seen as an indication of future performance.

There have however, been shorter periods during which performance has fallen below our expectations but in the past the evidence shows that these brief periods of underperformance have been matched by strong recovery.

Unfortunately, 2020 was one of these periods as we struggled in the immediate aftermath of the pandemic’s emergence. The global lockdown and violent market reaction caused by COVID concerns was not something we expected or were positioned for. However, in sharp market sell off like this our experience told us not to panic and remain true to our process. We continued to reinforce the merits of our approach and while we did make some modest portfolio adjustments, maintained belief in many of our managers.

Why? Because we had conviction in their talent and approach, and in many cases were reassured by the latent value many felt was within their portfolios. It’s encouraging to see that faith beginning to be rewarded, especially among more value orientated funds that struggled for some time in an environment in which growth has dominated.

With the rollout of vaccines continuing apace across the UK and US, we think pent up consumer demand could well provide further impetus with confidence growing as we emerge from lockdown.

Since the market lows the 5 Navigator portfolios have recovered strongly outperforming their respective peer groups.
Performance is even stronger since the news of COVID vaccines with all 5 being in the top quartile of their sectors.

BMO MM Navigator Growth C Acc

BMO MM Navigator Boutiques C Acc

BMO MM Navigator Distribution C Acc

BMO MM Navigator Cautious C Acc

BMO MM Navigator Balanced C Acc

Source: BMO Global Asset Management as at 31-Mar-21. 24-Mar-20 to 31-Mar-21 represents market recovery from lows. 10-Nov-20 to 31-Mar-21 represents first COVID-19 vaccine announcement.

2020 was a challenging time for our performance. However, we understood the reasons for this under-performance and widely communicated that, while also offering reassurance of our conviction in our philosophy and process which has served our clients well for over 25 years. We hope our recent results shows that our conviction is now paying off and that you are seeing your trust in our approach is being rewarded.

Thank you for your support.

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