Miton Special Situations fund manager Martin Gray is bearish on the global economy. “I can’t see where normal growth is going to come from,” he tells FE Trustnet, pointing out that small businesses are either “starved of cash” or risk-averse at a time “when there is no guarantee“ of growth.
Against this backdrop, Gray’s cautious approach has reaped rewards. His fund has returned 15% over three years and 29% over five years (against a 1.27% loss for the average IMA Flexible Investment Fund), and has delivered ten years of consecutive growth.
So, what’s Gray’s trick? “Gray is one of the few managers not to have underestimated the intensity of the economic and stockmarket fallout from 2008,” Mark Dampier, head of research at Hargreaves Lansdown, told ThisisMoney.com. “He has been pretty bearish and he has been spot on.”
Gray is pessimistic on equities, and cash is likely to provide the “backbone of the portfolio” for the foreseeable future, says Jeff Prestridge on ThisisMoney.com. Of the portfolio, 45% is in cash (with holdings in the strongest global currencies including Singapore and US dollars and sterling), 20% is in equities and 13% in bonds. But as FE Trustnet says, Gray has a flexible approach. “Between 2003 and 2006, he was aggressively positioned and… had one of the best-performing funds in his sector.”
For now Gray is content to try to “eke out” 5% annual returns. “I’d love to be making my portfolios more aggressive,” he admits to FE Trustnet. “But… it’s not worth the risk. I don’t want to stake my clients’ money on uncertainty.”
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Miton Special Situations fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Fidelity ILF USD | 3.3 |
| Thames River Global Bond | 3.2 |
| Schroder Asian Bond | 3.2 |
| Goldman Sachs Yen Liquid Res Inst. | 2.9 |
| GLG Japan CoreAlpha Fund | 2.9 |
| DB x-trackers S&P 500 Inverse Daily ETF (USD) | 2.6 |
| JP Morgan Japanese Investment Trust | 2.4 |
| ETFS Short Industrial Metals | 2.3 |
| NB Distressed Debt Investment Fund | 2.3 |
| DB x-trackers FTSE 100 Short Daily | 2.2 |