Research_strapline

Are you an:

Don't let the labels put you off!
If you're not an investor, but you want to learn, you can select investor

×

Register for FundCalibre!

We just need to know
if you are an:

Don't let the labels put you off!
If you're not an investor, but you want to learn, you can select investor

×

Brooks MacDonald Defensive Capital

Elite Rated by FundCalibre

Long-term capital growth and protection is the name of the game for this defensive, multi-asset fund. It aims to deliver positive absolute returns over rolling three-year periods in a range of market conditions, with less volatility than equity funds. Beginning life as a fund used solely by Brooks Macdonald for its clients own money, the fund was opened to the public due to investor demand and has strongly outperformed its peers since its 2006 launch.

Company Description

Brooks Macdonald Group was established in 1991 and consists of several subsidiary companies, offering financial services and advice to individuals, pensions and institutions, as well as a fund management business. The group was listed on the Alternative Investment Market (AIM) in 2005, although management and staff retain considerable ownership. Sector specialisations include property and absolute return.

Factsheet_bm_logo_full_colour_cmyk_bm_logo_

Fund Manager

Brooks Macdonald’s co-founder, Jon Gumpel, has run this fund since day one. Jon has more than 30 years’ industry experience and has won a number of investment management awards. He is assisted by Robin Eggar as co-manager, who brings strong expertise in defensive assets. Robin joined Brooks Macdonald in 2000 and heads the company’s London office. Jon and Robin are supported by several investment managers from other research teams.

Factsheet_jon_gumpel_-_brooks_macd_def_cap

Life is all about calculated risks; our fund prefers tortoises to hares, but is happy to take risk where already priced in or where capital is protected.

Jonathan Gumpel - Fund Manager

The Investment Process

While the types of assets that this fund holds can be a bit complicated—convertible bonds, preference shares, structured notes, bond and loan assets, and discounted assets—the goal of delivering positive total returns even when the market falls is straightforward enough. The managers seek to create a portfolio whose performance is ‘predictable’ by investing in assets that have ‘fixed returns’. They are careful not to overpay and will always try to buy assets when they are trading below their intrinsic value. Jon and Robin keep a close eye on the portfolio mix and won’t hesitate to sell one of their holdings if its yield drops unacceptably or if it seems likely to move in tandem with falling markets, in keeping with the positive absolute return aim.

Risk

Due to the nature of the fund, it is likely to underperform in strongly rising markets. As with all absolute return funds, it’s also important to remember that this is a target state, not a guarantee, and the value of an investment can still fall, as it did in 2008. To reduce the risk of assets failing to meet expectations, the fund typically has between 80 and 110 holdings and its underlying exposure is further diversified across different regions and sectors. During its lifetime, the fund’s volatility has been higher than other absolute return and mixed asset funds, but much lower than equity funds.

Our Opinion

A true multi-asset fund that switched into the targeted absolute return sector recently – a change that we feel much better highlights its strongest benefit to investors. The fund has been more volatile than its competitors in this space, but its annual returns are also typically well above the sector average. Jon and Robin use the range of tools available to them to dial up or dial down the fund’s sensitivity to market movements, which results in an intelligent investment mix that will see investors through a range of market conditions.

  • Fund
  • Sector

©2014 FundCalibre Limited. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not ,guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating.