Watching the market tank in recent weeks has given many investors painful flashbacks of 2008. But not everyone fears a market crash. Indeed, some fund managers actually make money out of it. Take Martin Gray, the manager of CF Miton Special Situations. In the last three months his fund is up 2%, despite the market carnage.
Earlier this year he believed that US stocks look overvalued and so he invested in an exchange-traded fund (ETF) that rises if the S&P 500 falls. He also cut his equity exposure, leaving around 40% of the fund in cash. “We’ve been bearish for a long time on the wider global environment, which has meant that we have been negative on ‘risk assets’ such as equities, commodities and property.” This approach means “his fund lags during a market recovery, but his style comes to the fore during tough times”, says Paul Farrow in The Daily Telegraph.
It also means that Gray is able to use his cash pile to snap up cheap assets when the opportunity arises. “I am in the fortunate position where we hold a lot of cash in the portfolios and where we can now buy into some good opportunities, including large-cap UK equities with sustainable yields, avoiding sectors such as financials, commodities and resources,” he says. “I’m looking to shift a little bit of that into equities, and I’ll look to Asian property as well if markets come back sufficiently.”
Gray has returned 157% over the past decade, which Hargreaves Lansdowne analyst Rob Morgan reckons is “worth taking note of”. He says the fund “represents a good long-term core holding for a portfolio”.
Contact: 0118-338 4033.
CF Miton Special Situations top ten holdings
| Name of holding | % of assets |
|---|---|
| UK Gilt 4.25% 2027 | 3.7% |
| Schroder Asian Bond | 3.6% |
| Goldman Sachs Yen Reserve | 3.4% |
| Thames River Global Bond | 3.3% |
| NB Distressed Debt Fund | 3.1% |
| Barclays Bank Plc | 2.7% |
| DB X-Trackers S&P 500 | 2.5% |
| CF Lindsell Train UK Equity | 2.2% |
| Fidelity Sterling Fund | 2.2% |
| GLG Japan Core Alpha | 1.9% |