In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.
This time our interviewee is Ben Peters, co-manager of the Morningstar 4-star rated Evenlode Global Income fund.
Which Sector Shows The Biggest Promise in 2022?
Our biggest sector allocation is to consumer goods, which is seeing some of the biggest impacts of input cost inflation currently, but is also where some of the best valuations are to be found. The valuation appeal might not help returns in 2022, but presents a long-term opportunity should global supply and demand start to balance out in the coming months.
What's The Biggest Economic Risk Today?
There are always economic risks we can’t perceive, and we set the Evenlode strategy up to be robust in a broad range of economic scenarios. Of the issues that are visible, inflation, caused by the impact of the coronavirus pandemic, war in Ukraine and other factors, is of course much in the headlines. We are starting to see supply chain issues affecting business’ ability to finish products and get them to customers, which is impacting revenues as well as margins. These are challenges that will take time to iron out.
Describe Your Investment Strategy
We look for companies that create goods and services that are valued by customers and difficult for competitors to replicate. Such companies generate good margins and cash flow that can be used to re-invest in the business, with some left over to pay to shareholders in the form of dividends and buybacks.
The attractive economics also provide resilience against economic difficulties and volatility, of which there has been plenty. Along with seeking out businesses with these characteristics, we value all of the companies that make it into our carefully-selected investable universe. Across the Evenlode funds we aim to invest in the best combination of quality and value in this sub-set of businesses that’s available in the market at any given time.
Which Famous Investor Do You Admire?
We have been influenced by many investors and have unashamedly borrowed a lot of ideas to construct the Evenlode investment process. One who has espoused a "quality and value" approach like the one we follow is Joel Greenblatt. His message, that it is beneficial to be systematic and disciplined in managing investments, should be applied by any manager of a portfolio, no matter the strategy.
Name Your Favourite "Forever Stock"
While we are fundamentally long-term investors and have indeed been long-term holders of many companies, I think it’s very important to be as critical of existing investments as of new ideas. Continuous re-assessment of investment cases is part of the Evenlode approach, so I’m not sure there is such a thing. That said, the ideal is that we have some in the portfolios we manage, but we don’t take it for granted!
What Would You Never Invest In?
Something I really don’t understand, but it’s important to understand that there are limits to one’s understanding in any investment.
Growth or Value?
Growth and value.
House or Pension?
Great if you can have either, ideal if you can have both.
What Are Your Thoughts on Crypto?
Idea, infrastructure and application potential: brilliant. Having a punt on Dogecoin: bad.
What Can be Done to Increase Diversity in Fund Management?
Having more role models from diverse backgrounds, which will take time. Spreading the word on what the industry is and what the opportunities are to students in a broad range of schools will help with this in the long run. We work with our local community careers programmes in Oxfordshire to raise awareness in a non-financial hub, and I am aware of other initiatives in cities that do similar. It's very much early days, though.
Have You Ever Engaged With a Company and Been Particularly Proud (or Disappointed) in the Outcome?
Yes, but it would be wrong to claim all of the credit (or the blame) – as an industry I think we have made great progress in constructively and collectively communicating with investee companies. This is to the benefit of all of our clients, and I think in the long run will benefit society and the environment in a positive way.
What's The Best Bit of Advice You’ve Ever Been Given?
Not really a piece of advice but I have been hugely influenced by my parents’ combination of steel, determination and kindness over the years, along with seemingly unending openness to new ideas and learning new skills.
What Would You Be if You Weren’t a Fund Manager?
I’d love to be a music producer, but I’d probably be a physicist.
