Simon Evan Cook is the manager of the Downing Fox multi-asset funds. He began his career with Fidelity, before joining Rothschild Asset Management then Gartmore. He joined Premier Asset Management in 2006.
Which fund in your portfolios are you most pleased with?
This is like asking a parent to pick their favourite child, but over the last month I’ve been most pleased to have Chikara Indian Subcontinent Fund in our portfolio. It’s been a tough run for active funds, but this has helped a lot.
Which was your worst asset allocation call and what did you learn from it?
Going back a decade, but it was to hold a fund dedicated exposure to Eastern European equities. It was dominated by Turkish and Russian shares, and so turned out to be a valuable life lesson that not all things mean revert. I sold out of it a year later, and thankfully have stayed clear of these markets ever since.
Right now, China or India?
India. The market’s expensive, but we have a good active fund here (managed by Chikara, see above) that can pick the reasonable wheat from the overpriced chaff. I don’t like the risk of capital getting trapped in China if global tensions worsen, which is a small risk, but would be painful if it happened. I’m no fan of communism either – give me the chaotic-but-free Indian system every time.
Biggest fund red flag?
A fund becoming too large – it doesn’t matter how good the manager is, once their fund is too big they can’t manoeuvre it any more, so you might as well buy the cheaper tracker.
Best source of uncorrelated returns?
Currently it’s mid and SMID-cap equities. With the AI craze sucking capital from everywhere else into megacap NVIDIA, the average company has become negatively correlated with ‘the market’. Other than that, we rely on cash and guvvies to dilute equity downside as we always do.
What makes your process different?
We only buy highly-active funds in our equity portfolio, many of which would be ‘satellite’ funds for other managers. But if you think you can pick satellite funds that will beat the market, then why hold a bulk of tepid ‘core’ funds? And if you don’t think you can do that, then you should be 100% passive and don’t muck around at the edges.
What do you think is your most interesting tactical call at the moment?
We genuinely don’t make tactical calls. We have stable top-down allocations that we don’t change. Instead, we allow our active managers, stock by bottom-up stock, to ‘micro allocate’ our equity portfolio for us. But if you fancy a flutter, UK small-caps look poised to do well.
Is there an asset class you are currently on the fence about (buying or selling)?
I suppose government bonds fit here. I’m not a great fan of them as a long-term investment, but if we get an old-school deflationary recession, then they’ll likely be the best defence a portfolio can have. But I have no idea if or when a recession will occur, so this could turn out to be no more than an unclaimed insurance contract.
