T Bailey

January 2010 Fund Manager commentary

Published 12:00AM 18 January 2010

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For the team at T. Bailey the passing of the 'noughties' has also seen our flagship fund, the T. Bailey Growth Fund, which launched in December 1999 pass its 10^th anniversary. 

Over that period there have been some positive changes to the features of the fund as it has evolved from its more humble beginnings.  Such developments have included the introduction of daily pricing and dealing, the introduction of a share class with low minimum investment levels (as little as £1,000 in one lump sum or just £50 per month for those wishing to save regularly) and its availability via the various fund platforms.  Indeed the very latest change to the fund has been the recent redefining of its benchmark to the IMA Global Growth Index from 1 January 2010.  This appears to have struck quite a chord with the funds investor base given the overwhelming approval it received from those unitholders who voted (in which it passed by a 99.3% majority, based on units held).

However, what has not changed in those 10 years is our fundamental investment process for managing this fund.  Indeed, throughout the last decade the fund has been managed with the same three broad stages to its investment process:

Strategic Asset Allocation ("SAA") where we set out our longer-term geographic asset allocation for the fund.  This is formally reviewed on a triennial basis (or more frequently if required) by T. Bailey's investment team drawing on advice from leading economists and investment professionals where necessary and takes account of geo-political, economic and market trends;

Tactical Asset Allocation ("TAA") where we implement shorter-term term geographic asset allocation positions within permitted ranges around the SAA as we believe appropriate based upon prevailing economic and market factors; and,

Fund selection ("FS") and portfolio construction in which we research, select and invest in collective investment schemes which fulfil the required exposure to global equity regions as set out by the SAA and TAA parts of our process.

So how have we fared in each part of our process over the last ten years?  

In summary:

We have added value from SAA in 8 out of 10 years, overall contributing on average 1.8% each year to the funds average outperformance of its peers;

We have added value from TAA in 7 out of 10 years, overall contributing on average 0.7% each year to the funds average outperformance of its peers; and,

We have added value from FS in 8 out of 10 years, overall contributing on average 1.3% each year to the funds outperformance of its peers (after allowing for the costs of the underlying funds).

Of course, regular readers of our reports will be very familiar with this transparency in reporting on how each part of our investment process has fared.   But it is this consistency of approach that has helped the fund outperform its peer group in 8 out of 10 calendar years and overall by 28.2%, equivalent to 2.3% per annum on average, since its launch.

Submitted by: Elliot Farley

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