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 week our interviewee is Charlotte Cuthbertson, manager of the Morningstar 4-star rated MIGO Opportunities Trust (MIGO) at Premier Miton.
Which Sector Shows The Biggest Promise in 2022?
Biotech is an interesting sector. It’s been in its own bear market since 2021, with drug pricing regulation hanging over the sector as well as resources being diverted away from other illnesses due to fighting Covid, meaning progress was delayed. Adding to this, the rotation away from growth to value means that we are seeing some companies trading at historically low multiples.
What's The Biggest Economic Risk Today?
The reason inflation and rising interest rates are so toxic is because of the amount of debt in the system.
Describe Your Investment Strategy
Finding overlooked and unloved opportunities in the investment trust world. Investment trusts change hands in the market at the point where supply and demand falls into equilibrium. This market can be highly inefficient, allowing us to buy and sell at prices which are detached from where we believe fundamental value lies.
Which Famous Investor Do You Admire?
Georgina Hamilton at Polar Capital. She was a big inspiration when I started in the industry and helped when I was beginning my career. Incredibly smart, great investor and lovely person.
Name Your Favourite "Forever Stock"
A forever stock isn’t one that we invest in. Instead, we tend to look for themes coming in and out of favour, so selling once they have become over popular. Probably the longest theme in the portfolio currently is uranium (Geiger Counter and Yellowcake are the holdings).
What Would You Never Invest In?
Something I didn’t understand. You’re less likely to get an unpleasant surprise if you can clearly understand what you’re invested in.
Growth or Value?
It’s not really how we look at investment but as we are looking for deeply discounted investment trusts perhaps naturally fall more on the value side. But that belies the fact that we invest in “growth” areas as well, just in a discounted format. In fact, we are currently finding more opportunities given many trusts operating with a growth style are now out of favour and are trading at wide discounts.
House or Pension?
A pension is an important investment but you can’t live in a pension! Having a house means you have an asset but also gives you a space to call your own
What Are Your Thoughts on Crypto?
There’s the underlying technology which will have a value but, as we’ve seen, the actual cryptocurrency is not the diversifying asset people had believed. I’m also very wary of areas that have little regulation.
What Can be Done to Increase Diversity in Fund Management?
Women need to be supported all the way through their careers from making sure intern and graduate schemes attract women to ensuring there are opportunities for women to hold C-suite positions, which there is sadly a dearth of in our industry. Diversity is clearly more than just female; background and ethnicity are equally as important, but being a woman, I feel more confident speaking about my own experience.
Have You Ever Engaged With a Company and Been Particularly Proud (or Disappointed) in the Outcome?
We engaged with an Indian specialist closed end fund which had been struggling and allowed its shares to drift out to an extremely wide discount. We were keen to introduce a new capital structure which would allow shareholders to exit at close to net asset value a couple of years down the road. This provided an opportunity for the managers to turn things around whereas some other shareholders’ preferred route was simply to force a wind up.
In the end the Indian market rebounded and the manager returned to form. We benefited from the powerful combination of a rising portfolio and a narrowing discount. The trust still exists today but could easily have been killed off at a multi-year low.
What's The Best Bit of Advice You’ve Ever Been Given?
Leave your ego at the door – you get a lot more out of people when you do.
What Would You Be if You Weren’t a Fund Manager?
I’m renowned in the team for going on holiday to some interesting places so maybe a travel journalist? Or maybe a trainer for guide dogs for the blind but as my puppy is struggling to remember “down” perhaps I’ll stick to the day job…
