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27 Jan 2011

Top General Equity Unit Trust In 2020 - Credit Given To Multi-Counsellor Approach

Morningstar reports that the Foord Equity Fund was ranked as the top General Equity unit trust in 2010.  The fund was also the top fund of the 99 funds listed in the General Equity, Growth and Value sectors.

Perhaps not coincidently, December 2010 also marked the one year anniversary of the adoption by Foord of the multiple-counsellor approach to fund management within its equity portfolios. At the beginning of December 2009, Dane Schrauwen was given a minority share of the portfolio management of the Foord Equity Fund and other participating equity portfolios.  A year on and Schrauwen has now been allocated an increased percentage of the funds, whilst Nick Balkin, a rising star on the Foord team, has also been given a minority share of these portfolios.

The use of multiple-counsellor portfolios is not unique to Foord.  The process was pioneered by the Capital Group (one of the world’s largest and most successful fund management houses) in the USA in the early 1950s.  It was a departure from the mind-set of the “star-manager” and also from consensus-based management, which requires the whole or the majority of the team to agree on each security before it is included in the portfolio.  “In consensus-based management,” says Cluer, “many good investment ideas are foregone because of a lack of consensus.  Speed of implementation also suffers since agreement must be reached on each decision.”

The Foord approach does differ from that of the Capital Group and similar approaches used by leading SA fund managers in one critical aspect.  The traditional approach allocates large, notional pools of assets to each manager, sourced from multiple clients.  At Foord, each individual participating portfolio is still managed separately according to its unique requirements, benchmark and cash flows.  This ensures that the multiple-counsellor managers are still intricately familiar with each mandate and that the portfolio receives the individual attention which it deserves.

“Already within the past year, we have witnessed the benefits to clients of the multiple-counsellor approach through splitting the growing volume of assets under management amongst multiple managers; diversifying key-man risk; introducing new investment ideas into the fund; allowing each manager to build more concentrated portfolios of their best ideas; increasing internal competition and diversifying investment risk,” comments Paul Cluer, Managing Director of Foord Unit Trusts.

Given such positive results, Foord have now decided to expand their multiple-counsellor approach and will run dummy balanced fund portfolios over the next year with a view to testing the expansion of the system to multi-asset portfolios at a later date.  Cluer says that Foord will only roll out the multiple-counsellor approach to the more complex fund management field of multi-asset portfolios if it is 100% satisfied with the results of its internal testing programme.

In addition to its operational and investment success over the past year, the expansion of the multiple-counsellor system gives recognition to the depth of talent in Foord’s investment team. “This talent has been groomed over more than five years from when Foord first implemented a young research team which is now finding their wings in the fund management arena.  We look forward to their continued contribution in the years ahead,” concludes Cluer.



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