“A manager’s alpha can become worse not because they are bad at picking stocks but because the market is rewarding or unrewarding for the particular ‘style’ they are concentrated in. By blending styles this can be avoided to a certain degree.
“People often ask how we can use this style in a market which we have never seen before and the answer is that we have seen it before. For example, we are not interested in why there is low liquidity, we are interested in how investors will react and what stock selection tools they will use because it is low – a situation which has been seen many times before.”
Defensive return
In the last year, he said markets have been unstable but have not dropped a lot, instead moving towards defensive stocks and volatility.
“We are quite defensively placed at the moment,” he said. “We have gone from being quite pro-market in the first quarter to quite defensive, which I think is just playing off the number of macro issues affecting the markets leading other investors to move away en masse.”
OMGI has also announced today that the £38m onshore Old Mutual Global Equity Income Fund, sub-advised by O’Shaughnessy Asset Management, will close on 15 September this year subject to regulatory approval.
The fund has seen a gradual decline in assets over the last few years and remaining clients will have their proceeds returned in order for them to “reinvest in other products”.
On the closure, managing director Warren Tonkinson said: “We believe our decision to close the onshore Old Mutual Global Equity Income Fund is in the best interest of investors.
“Clients have been informed of our decision to close this fund and of the options available to them.”
