Steve Carew: Sure. Certainly there have been cases where we would say concentrated portfolios are being launched to raise more assets, or as part of a staff retention scheme, to keep a deputy portfolio manager. And in some cases we think that can be a positive. If it’s keeping the heir apparent, if you like, in the team along with the key portfolio managers. You have to try and get to the bottom of the overall situation.
David Wright: I think one of the natural questions to those managers is whether they’re just dialling up the active positions in their diversified portfolio, or whether they’re actually starting again. There’s been a number of the institutional managers, mainly, that have launched concentrated portfolios, probably three years ago now. It’s been a real mixed bag – some have outperformed their diversified portfolios, others haven’t. We believe that running a concentrated portfolio is a different mind set. So the way you approach it should be quite different from the way you approach a normal diversified one. I don’t personally think it’s as easy as just dialling up your active bets.
Kristian Fok: You’ve got the broad based fund which has large funds under management. And you’ve got the concentrated version which has actually got much lower funds under management. Often that gives the portfolio manager…forgetting about the restrictions on stocks, because if there’s less funds under management, it often gives him more freedom to actually really execute. So it’s not so much about conviction, but it’s actually about the universe you invest in. And so sometimes you actually find, ironically, that the concentrated funds have more small cap biases at times because they can actually get into the ideas, whereas that doesn’t necessarily intuitively… You know, you’d think that if you’ve got less stocks to pick, you’re having bigger positions…but because there’s less money in those funds, they’re able to actually not only execute supposedly ‘best ideas’ but also do it efficiently. So you really do need to look at whether it’s just a subset or…and it’s also the relative weightings that they put in there, and quite often you can see that there is quite a difference , especially some of the smaller cap ideas or the more liquidity constrained ideas.
Russell Clarke: There is a different mind set running a concentrated portfolio, and in particular it’s much harder to balance the risk in a concentrated portfolio. As the number of stocks come down, in a sense perhaps it’s easy to dial up the ideas from the core portfolio in terms of what you really have conviction in, but it’s much harder to make the trade off in risk. So therefore some people are going to be able and good at doing it, whereas other managers might have thought about the marketing but not really thought about the appropriateness of running it.