Francis Brooke is a director of Troy Asset Management and manager of its income fund, which has outperformed almost all its competitors, on both an absolute and risk-adjusted basis, since its launch in 2004.
Author: Jonathan Davis
Author, columnist and investment professional.
Adventures In Farmland
My latest contribution to The Spectator explains how I came to be involved four years ago as a founding shareholder and director in Agrifirma, a private company whose business is buying and developing farmland in Brazil. The company currently owns 42,000 hectares of land in the state of Bahia, with a further 27,000 hectares under option.
Q and A: Richard Buxton (Schroders)
Richard Buxton has been Head of UK Equities at Schroders for the past ten years and someone whose views on the UK stock market I have followed for nearly twice that time. His UK Alpha Plus Fund, a concentrated portfolio of some 30 large and midcap stocks, selected on the basis of in-house research, as risen in value by 163% since its launch in 2002 and ranks fourth of 191 funds in the All Companies sector over that period. This is his current take on where the markets sit.
The Mystery of Momentum
The three big anomalies in stock market behaviour that academics have identified over the past 50 years are these:
* Small cap stocks tend to outperform large cap stocks over time;
* Value stocks tend to perform better than growth stocks; and
* Momentum, or buying the winners of the recent past and selling the losers, is a surprisingly effective strategy.
Of these three the most recent to be documented, and in some ways the most surprising, is the last.
After all, if it was so easy to put together a winning strategy by following a simple “buy winners, sell losers” rule, you would expect so many investors to adopt the strategy that it would cease to work. This is exactly what happened in the 1980s, when so many investors tried to implement the recently documented small company effect that the strategy stopped working for several years afterwards.
Yet, as Dimson, Marsh and Staunton, the London Business School academics, reported yesterday as they unveiled in London the latest edition of their annual Global Investment Returns survey, the momentum effect has been both powerful and persistent, despite all the publicity that it has attained in recent years, which should by rights have killed it off as an observable phenomenon.
Q and A: James Anderson (Baillie Gifford)
James Anderson, CIO of the Scottish fund group Baillie Gifford from 2006 to 2010, has been managing the Scottish Mortgage investment trust for the past 11 years and is a regular contributor to Independent Investor. In our latest Q and A he offers this notably upbeat assessment of the current outlook for equity investors. Scottish Mortgage is a global generalist trust that has produced a total return of 102% over the past ten years.
Beacons of Sound Advice in Hard Times
This will be my last column in this space for a while, as I am taking time off from regular back page writing in order to take up, for a stint, the cause of long term investors in the institutional market. Although I will continue to offer periodic thoughts on the state of the markets on my website, where you can find more details, and an archive of my past columns, it seems like a good opportunity to award some informal gongs to those whose thoughts or actions have most impressed me over the course of the past three years writing for the FT.
Jonathan Davis 