If it is good enough for Oasis, a comeback is good enough for me.
My old colleague Alex Illingworth wanted me to join him at his new place. So we are getting the band back together.
Unlike the Gallaghers, Alex and I have had only a year out from managing money together.
That is perhaps because we have no making up to do. We have never had arguments on a public (or private) stage. He has never called me something unpublishable in FT Adviser, and I have never cracked him over the head with a cricket bat. A bit boring, really.
Since we went our separate ways, he has been a lot busier than me – launching his own investment management firm, Goshawk Asset Management, with the backing of City legend Christopher Mills and his Harwood Capital Group.
I have been playing bridge, learning to draw and practising my cello. But I haven’t stopped thinking about investing – or how to do it better.
When friends ask if it is a good idea to throw myself back into the world of fund management in my early 60s, I think of a play on the title of the Gallagher brothers’ smash debut album: maybe, definitely.
Maybe: I have always thought that being a bit older may be a good thing for fund managers.
In the 2000s I worked with Nils Taube, who had started investing in global equities in the 1950s. I remember him saying to me every January 1: “If I keep working at it, maybe this year I’ll finally crack it.” He was getting on for 80.
Definitely: This is a good time to return to active management, though not obviously so. Equity investors are currently moving out of active funds into index-tracking funds – a move due partly to the lower charges of tracker funds but also to the mediocre performance of many active managers.
Many of my generation of City professionals suspect that this mass move into tracker funds is coming at just the wrong moment.
We have seen before bubbles building where a small number of stocks dominate the index and become very overvalued. We do not know when such bubbles will burst – indeed, the peak tends to be marked by a moment of exuberance and ‘fear of missing out’.
To manage these periods, you need some of your savings in an equity portfolio with stocks selected by traditional valuation measures and which maintains a balance regardless of the index becoming heavily weighted to only one area.
Such a fund should be expected to perform very differently from the index – that is the point. There will be periods of underperformance, but over the medium to long term – over five years – such a portfolio should show its value in a choice of savings funds.
