How to Invest Like a Top Fund Manager

Britain’s top fund managers, including Mark Slater and Neil Woodford, give their top tips for investors

To be successful at investing, investors should go for ‘dull and reliable’ instead of being dazzled by what seems ‘exciting’, says Martin Cholwill, manager of the Royal London Equity Income fund, as exciting investments that seem too good to be true often are.

This is one of many top tips provided by the UK’s leading fund managers, which online investment platform TD Direct Investing has collated as part of its Best of British fund managers research*, an annual look at the 25 best fund managers in the country.

According to the 25 fund managers interviewed by TD Direct Investing, many agreed on common themes such as flexibility and long-term investing as keys to successful investing. Below, we have compiled the most popular tips:

No. 1: Do your homework

Audrey Ryan, manager of the Kames Ethical Equity fund, and Mike Fox, manager of the Royal London Equity Income Fund, agree that being well-read and doing your homework is the key to successful investing. Audrey Ryan says: “Most great investors spend a significant part of their time reading. This cumulative knowledge base is the raw material for good investment decisions”. Mike Fox concurs, saying: “Do your homework. High conviction portfolios are based on thorough research and companies’ meetings.”

No. 2: Be flexible

According to Old Mutual’s Dan Nickolls, a flexible style of investing is key. “Economies and stock markets move through different phases – sometimes they are in recovery mode, other times in recession mode. So, different investment styles will perform under different conditions. The trick is not to pigeonhole ourselves,” he said.

No. 3: Cut your losses

Mark Slater of MFM Slater Growth believes running profits and cutting losses is crucial. “Most people do the reverse which means they end up with small profits and large losses. However, we like to run and add to our winners while seeking to exit companies that falter.” Investors can apply this to their own investment style by dropping the stocks that are underperforming.

John Wood, of JO Hambro Capital Management, agrees, saying: “Cut your losers. This is particularly relevant when management teams start misbehaving by doing large and unnecessary deals, or expanding into new business lines where they have no experience or competence. This is invariably a signal to sell the shares.”

No. 4: Invest for the long term

Fund managers universally agree that to be a successful investor, one must invest for the long term, holding funds for at least three to five years.

Throughout his career, Neil Woodford has believed that (in the short term) markets are inefficient and that share prices can become dislocated from their true value. This creates opportunities for long-term investors and forms the basis of his investment philosophy and strategy. “I aim to exploit this inefficiency by focusing on where the economy will be over three-to five-years and where companies will be over that time period. This is why I will often buy shares on the dips – because fundamentally the reason why I hold the stock may not have changed, but there’s an opportunity to buy it at a lower price,” he said.

For the full list of fund manager tips, visit the TD Direct Investing website here: http://ican.tddirectinvesting.co.uk/expert-opinion/top-tips-best-british-managers/

Britain’s top fund managers, including Mark Slater and Neil Woodford, give their top tips for investors

To be successful at investing, investors should go for ‘dull and reliable’ instead of being dazzled by what seems ‘exciting’, says Martin Cholwill, manager of the Royal London Equity Income fund, as exciting investments that seem too good to be true often are.

This is one of many top tips provided by the UK’s leading fund managers, which online investment platform TD Direct Investing has collated as part of its Best of British fund managers research*, an annual look at the 25 best fund managers in the country.

According to the 25 fund managers interviewed by TD Direct Investing, many agreed on common themes such as flexibility and long-term investing as keys to successful investing. Below, we have compiled the most popular tips:

No. 1: Do your homework

Audrey Ryan, manager of the Kames Ethical Equity fund, and Mike Fox, manager of the Royal London Equity Income Fund, agree that being well-read and doing your homework is the key to successful investing. Audrey Ryan says: “Most great investors spend a significant part of their time reading. This cumulative knowledge base is the raw material for good investment decisions”. Mike Fox concurs, saying: “Do your homework. High conviction portfolios are based on thorough research and companies’ meetings.”

No. 2: Be flexible

According to Old Mutual’s Dan Nickolls, a flexible style of investing is key. “Economies and stock markets move through different phases – sometimes they are in recovery mode, other times in recession mode. So, different investment styles will perform under different conditions. The trick is not to pigeonhole ourselves,” he said.

No. 3: Cut your losses

Mark Slater of MFM Slater Growth believes running profits and cutting losses is crucial. “Most people do the reverse which means they end up with small profits and large losses. However, we like to run and add to our winners while seeking to exit companies that falter.” Investors can apply this to their own investment style by dropping the stocks that are underperforming.

John Wood, of JO Hambro Capital Management, agrees, saying: “Cut your losers. This is particularly relevant when management teams start misbehaving by doing large and unnecessary deals, or expanding into new business lines where they have no experience or competence. This is invariably a signal to sell the shares.”

No. 4: Invest for the long term

Fund managers universally agree that to be a successful investor, one must invest for the long term, holding funds for at least three to five years.

Throughout his career, Neil Woodford has believed that (in the short term) markets are inefficient and that share prices can become dislocated from their true value. This creates opportunities for long-term investors and forms the basis of his investment philosophy and strategy. “I aim to exploit this inefficiency by focusing on where the economy will be over three-to five-years and where companies will be over that time period. This is why I will often buy shares on the dips – because fundamentally the reason why I hold the stock may not have changed, but there’s an opportunity to buy it at a lower price,” he said.

For the full list of fund manager tips, visit the TD Direct Investing website here: http://ican.tddirectinvesting.co.uk/expert-opinion/top-tips-best-british-managers/