By MARCEL PORCHERON 16/11/2006
Les Jones, lead manager on the Old Mutual Japanese Select, does not invest primarily on company fundamentals but concentrates more on fund flows to the market. He attempts to second guess which areas of the market his peers and other market participants will favour next. At the stock level technical analysis forms the cornerstone of security selection.
Whilst Jones has successfully added value over the long term, investors who buy this fund should be aware that his process is broadly based on an information advantage (in terms of fund flows) and how Jones interprets stock price technicals. We are concerned that Jones' information advantages is being eroded. Furthermore, actively managed assets under management are low relative to other market participants giving the team less financial muscle. Recent performance has been disappointing where we would have expected Jones’ process to have done better. Going forwards, we feel it may be more difficult for the team to continue to add value.
The fund has been downgraded from 3 to 2 stars.