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 Marcus Phayre-Mudge, manager of the Silver-rated TR Property Investment Trust (TRY).
Which Sector Shows the Biggest Promise in 2023?
Within property, the industrials sector – especially light industrials – and urban logistics are showing the biggest promise. We have long been cheerleaders for multi-let industrials, generally terraces of smaller units. Very little new stock has been built over the last few decades with alternative (multi-storey) uses being far more valuable. Rents remain low in many parts of the country making new development unviable. The tenant rosters have evolved hugely in the last 20 years, undergoing ‘gentrification’ and many born out of internet connectivity and the ability to access customers directly. Therefore, these sub-sectors benefit from a health supply-demand imbalance.
What's the Biggest Economic Risk Today?
Inflation remaining stubbornly high. Central banks appear resolutely determined to remain hawkish, with the Bank of England hiking rates again last month. Our assumption is that the interest rate cycle will peak this year, but inflation will remain above targets.
Describe Your Investment Strategy
Simply, our investment strategy is looking for well-run real estate businesses exposed to markets with good supply-demand dynamics coupled with sound balance sheets (without too much debt).
Which Investor(s) Do You Admire?
The forefather of value investing, as some refer to him, Benjamin Graham. His argument of concentrating on the real-life company, its financial reports and operations, drives much of my investment strategy today. But my modern admiration goes to Merryn Somerset Webb, columnist and podcaster at Bloomberg, Editor-in-Chief at MoneyWeek and an ex-FT columnist. I like the way she simplifies complex financial issues of the day for the lay reader.
Name Your Favourite 'Forever Stock'
London Metric, which owns one of the UK's leading listed logistics platforms alongside a grocery-led long income portfolio.
What Would You Never Invest In?
I don’t see myself ever investing in a company where there is a lack of alignment between shareholders and management – it goes against what I believe is the basis for a stable and successful investment. It’s important for boards to have self-awareness that allows them to make the best decisions for shareholders particularly when it comes to the tough decisions around management change or wider corporate action.
Growth or Value?
It can’t really be one or the other: fundamentally, I’d go for growth, but equally real estate equity is a value sector. I prefer to position myself at the growth end of the value sector.
House or Pension?
House.
Crypto: Brilliant or Bad?
Bad.
What Can be Done to Improve Diversity in Fund Management?
We shouldn’t disguise the fact that men are still over-represented in the graduate roster entering the industry. More needs to be done at the top of the funnel (at school careers / job fairs) to promote fund management as a rewarding career for many.
Have you Ever Engaged With a Company and Been Particularly Proud (or Disappointed) of the Outcome?
Many times. I’m very proud of helping a number of listed small companies that would otherwise have become increasingly irrelevant for equity investors. A clever investment strategy and path for growth helps to keep assets in the public market.
What's the Best Advice You’ve Ever Been Given?
What you put in, is what you get out.
What Would You be if You Weren’t a Fund Manager?
A game ranger – working on the conservation frontlines. I spent a brilliant pre-university year of my life doing this, and I continue to support a range of animal welfare charities.
