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 Peter Hewitt who manages the CT Global Managed Portfolio Trust (Growth and Income portfolios).
Which Sector Shows the Biggest Promise in 2023?
I am really interested in Private Equity Trusts. It is a contrarian call however there are some outstanding managers whose trusts are selling at very wide discounts of circa 40%. The effect of a potential recession is almost certainly priced into ratings and the underlying assets will probably do better than expected. The discount on share prices could narrow quite significantly.
What's the Biggest Economic Risk Today?
Definitely inflation. Should it become embedded in the system real wealth and savings erode rapidly. It ends up distorting investment decisions. Having lived through an inflationary period in the 1970s I would not want to go through that again.
Describe Your Investment Strategy
I run the CT Managed Portfolio Trust which has two portfolios one focussed on capital growth and the other on a high and growing income with some capital growth. For the former, I favour a core of investment companies that invest in secular growth. Over the long term, it is from investment trusts with these characteristics you can make multiple times your original investment. For the Income portfolio, there is a focus on undervalued and unloved asset classes which can generate a good level of income. A good example being UK equities which are very attractively valued.
Which Investor(s) Do You Admire?
Warren Buffett is the obvious. His record over the years is amazing. In the UK there are two guys I know who have fantastic records. Nigel Wray has such an understanding of smaller companies and what makes them successful both listed and unlisted and Nick Leslau who is a brilliant property investor. They often team up together and have done extremely well with Burford, Prestbury, and more recently Secure Income REIT.
Name Your Favourite 'Forever Stock'
I only invest into investment companies, so I would want to be invested into a fund for the long term which focussed on “secular growth” opportunities. Allianz Technology Trust is a good example of a trust with these characteristics. Also, Monks Investment Trust run by Baillie Gifford gives a balanced exposure to a series of outstanding growth companies from around the globe.
What Would You Never Invest In?
Assets where it is difficult to understand what they do or how they work and importantly how they are supposed to generate their investment returns. Sounds obvious however there are many times I have come across what I thought was an interesting idea only to find after more thorough analysis that it was difficult to work out how the returns would be made.
Growth or Value?
For the growth portfolio I manage it would definitely be growth. For investment companies over the long-term the compounding of net assets far outweighs the one time closing of a discount. Even for our income portfolio I favour a growth biased approach however the investment company I invest in has to have the ability to pay a decent level of income with some growth.
House or Pension?
I suspect it is an easier decision if you owned a property in London or the Southeast as it would be highly valued. However, on balance probably a property for most in the UK would be worth more than a pension.
Crypto: Brilliant or Bad?
Simply don’t understand it. Doesn’t seem to make anything or provide a service so best to avoid.
What Can be Done to Improve Diversity in Fund Management?
There is still a lot to do however the direction of travel is good. I suspect more of what is currently being done in terms of gender and ethnic diversity will move us in the right direction. Compared to when I started there have been big changes which is very much for the better.
Have you Ever Engaged With a Company and Been Particularly Proud (or Disappointed) of the Outcome?
I inhabit the world of investment companies where change has stepped up a gear in recent years and looks like it will increase further from here. This is a good thing for the sector. I have been involved in change at certain investment companies though the actual names are best left behind closed doors.
What's the Best Advice You’ve Ever Been Given?
“When you are in a hole lad stop digging!” Sometimes you can convince yourself of the merits of a particular idea but nobody else seems to see it. That normally means you are wrong. Best to eat some humble pie and move on.
What Would You be if You Weren’t a Fund Manager?
Back in the day I used to play rugby quite seriously. Never got a cap for Scotland though I did sit on the bench (you only got on in those days if there was an injury). I suppose the highlight would have been playing for Edinburgh against the All Blacks. So, if I had my time over and wasn’t a fund manager, I would have liked to try playing rugby professionally.
