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You're listening to Strictly Business
Podcast with Lindsay Williams.

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Welcome.

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Today we're in conversation with John
Stopford, Portfolio Manager for the 91

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Global Managed Income Fund.

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Now, John, before we get on to
performance, I want to talk about

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something that's very much linked to
performance,

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and that's the objectives of the Global
Managed Income Fund,

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and thereafter talk about who this fund is
suitable for.

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So there's two questions there,
objectives, then...

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suitable investors.

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So objectives first, please.

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Okay, so the

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Global Managed Income Fund at 91 is
looking to deliver a defensive total

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return

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driven by an attractive yield,

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which is underpinned by securities paying
reliable income.

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And it's aiming to deliver that with low
volatility,

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especially in more distressed market
conditions.

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And then in terms of who it's suitable
for,

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it's essentially a defensive alternative
building block for people's portfolios for

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the more defensive

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part of their portfolio, or potentially as
an alternative to more traditional

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defensive assets like fixed

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income.

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Okay, so it has defensive qualities and
goodness me, what we're going through at

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the moment,

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what everyone is going through at the
moment could do with a little robust

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defense.

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over the past 12 months I read, the fund
successfully achieved its objective of

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attractive income and

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longer-term capital growth, which you just
mentioned, and a lower volatility.

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How did you do that, first of all?

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In other words, what went right?

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And were there a few things that went
wrong?

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Well, we're always focused on the
objectives, and we have a clear idea about

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how we go about achieving them.

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So the portfolio is built from the bottom
up.

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We select individual securities that echo

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the characteristics we're looking to
deliver at the overall portfolio level.

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So looking for resilient income generating
securities at a reasonable price,

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and then combining them to try and achieve
a sort of stable or solid return with low

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volatility.

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In terms of what went right, I mean,
actually, most bits of the portfolio did

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reasonably well.

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We were, I would say, relatively
defensively positioned.

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But we did have a bit of equity which
benefited from the rally that we saw

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through most of last

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year into the beginning of this year

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but also we actively managed and selected
within fixed income and other areas of the

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portfolio and that

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that worked well as well so we benefited
from the

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rally in bond yields that we saw around
the middle of the year into the third

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quarter but also we were well

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positioned when yields rose again by being
more defensively positioned in the latter

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part of last year.

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Risk management now.

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Do you change your risk management model
or profile in terms of different stages of

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market

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volatility?

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Obviously, markets at the moment, most
asset classes, incredibly volatile.

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Do you change your risk management?

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Yeah, absolutely.

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So overall, we're looking to be defensive.

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So the kinds of securities we choose tend
to be towards the more defensive end of

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things.

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And they're underpinned by solid income.

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So they're designed to be naturally
defensive, but we're targeting a low level

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of volatility.

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But also when market stress picks up, we
will de-risk the portfolio further, either

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actively,

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or in some cases,

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we will have bought essentially insurance
in the options market to reduce risk at

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times of market

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stress.

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And we did that last year.

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Speaking of last year, 2024, Donald Trump
on the campaign trail.

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He warned Americans that a vote for Kamala
Harris would lead to a market meltdown.

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He may have been right, should Kamala
Harris have become president, but we'll

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never know that.

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But, on the other hand, this year has seen
the stock market's worst start to a

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presidential term in

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modern recorded history.

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And people are saying it's to do with Mr
Trump himself.

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and there he is sitting there proud as
punch and doesn't seem to...

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relent.

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John, does this worry you?

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Yes, absolutely.

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It worries me.

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I think markets came into this year pretty
complacent, pretty bullish about what

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Trump might mean for the US economy, for
US growth.

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I mean, the so-called US exceptionalism
trade was in full force.

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I mean, I think we were always somewhat
sceptical, particularly about the ordering

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of his policies with some of the bad
things more.

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so-called stagflationary policies coming
before anything that was more helpful.

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But generally, obviously, we're also we
tend to run things in a fairly cautious

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position.

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So we're naturally defensive.

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We were more so coming into this year.

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We've also made use of options to protect
some of the downside.

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And in particular, a big advantage we have
is we're not driven by a benchmark.

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We're not US centric in the way that most
portfolios or most benchmarks are.

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We're picking individual securities for
their resilient income.

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And so we can...

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look for where the best opportunities are,
and many of them aren't in the US, and we

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can avoid areas that we're worried about,

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which clearly at the moment is often in
the US.

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Yes, yes, it is.

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So for how long it will last is the big
question.

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Now, you've spoken about your risk
management stance with different levels of

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volatility in the markets,

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but have you actually changed any of the
fund's positioning, or was its positioning

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before?

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the turmoil that we have endured and will
continue to endure probably for a little

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while.

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Were these positions designed for these
sort of events?

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Well, to some extent, the latter is true.

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And I would say we've done a bit of both.

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We anticipated that Trump could be
somewhat disruptive.

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And so we had begun to reduce risk and
reduce U.S.

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exposure coming into the sort of immediate
post-election period.

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So in particular, we took a lot of
exposure out of US fixed income,

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particularly some of the sort of more
traditionally safer areas, so US

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government bonds.

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We'd also reduced equity and focus very
much on more defensive,

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particularly non-US exposure within
equities, which we saw as better valued

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individual names in those areas.

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And we've been very cautious about
corporate credit where there just seemed

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to be no value whatsoever.

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so yeah Some of that we had done in
anticipation of noise.

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I think we've all been surprised just how
dramatic some of the actions and

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consequences have

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been.

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But we sort of have continued to do a
little bit of that and taking advantage of

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the volatility to see whether there are
any areas

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actually that look more interesting.

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And so, you know, we've done a bit of both
of those.

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Do you ever wake up in the morning and
have a look at your screen and say,

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Goodness me, I've never seen that before.

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This is a great opportunity that's
presented itself.

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Never mind all the bad stuff that we talk
about.

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We should be having a look at this.

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I mean, for example, this is my example,

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bond markets falling as equities fall.

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I've never seen it to such an extent as
we've seen it in the last few weeks, John.

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You're obviously seeing opportunities.

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Yeah, absolutely.

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So because we aren't tied to a benchmark,
we're not.

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forced to own certain things, we can go
out and look for where is there a genuine

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opportunity,

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where is something caught up in the noise
or the maelstrom and appears to be, you

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know, relatively mispriced.

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And I think some government bonds in
particular look interesting to us, because

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although

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Trump's policies are likely to lead to
higher inflation in the US,

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they're likely to lead to weak growth
everywhere and potentially create an

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opportunity for interest rates to fall
outside

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the United States.

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And so markets like New Zealand, where we
can find some interesting

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government-related paper yielding sort of
close to 5%,

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similarly in Australia.

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Canada looks interesting as a sort of
alternative to the US in North America

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with, you know,

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perhaps more sensible, more orthodox
policies.

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And then within the equity market, you
know, some of the naturally defensive

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parts of the market have been out of
fashion for a

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while.

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So in particular, some of...

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the sort of consumer staple stocks, many
of those actually look quite attractively

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valued,

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and we think give naturally defensive
characteristics when people are looking

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for somewhere to put their

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money in uncertain times.

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Investors naturally flock to safe havens
when times like this confront them.

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Gold is a great example.

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Goodness me, I don't know if that's
something that you're able to look at.

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But anyway, safe haven assets.

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have done well, with a couple of very
notable exceptions, which we've just

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mentioned.

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Can multi-asset funds such as yours
provide a solution amidst the uncertainty?

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In other words, your fund is a safe haven
asset, perhaps?

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Yeah, absolutely.

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We think this is the kind of environment
that our strategy was designed for,

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where it's very uncertain how certain
assets, certain markets are going to

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behave.

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And in particular, I think a lot of
conventional

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portfolios rely on bonds as a diversifier,

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as something to balance the risk of
holding equities.

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And that characteristic has proven pretty
unreliable in recent years,

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and no less so than in the current
environment.

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If anything, bonds are to some extent now
the epicenter of risk.

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They are the transmission mechanism of
quite a lot of the concerns about the

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policy agenda of Donald

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Trump.

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So, you know, having them as your...

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your ballast or your defensive asset, your
safe haven, you know,

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looks like perhaps it's no longer
appropriate.

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And so you need to have something that can
adapt to a changing world.

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And we have the flexibility to look for
safe income where we can find it.

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We've got it.

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That's the clear return drive we have.

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We can look for those opportunities where
we think they are safest.

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But also part of our mandate is to run a
low volatility portfolio and look to

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protect the downside so

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when things get particularly hairy or
nervy,

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we can focus more on that aspect of our
mandate, protecting the downside,

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but we can then also look for where are
new opportunities appearing and build a

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well-diversified,

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well-mixed portfolio that isn't relying on
the traditional bond equity mix

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that most portfolios have historically
because we're just not sure that that's

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going to work anymore.

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John, thank you so much for your time and
insight.

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That's John Stockford, Portfolio Manager
for the 91 Global Managed Income Fund.

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The views and opinions expressed in these
podcasts are those of Lindsay Williams and

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various contributors and do not reflect
the policy,

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position or opinion of any other agency,
organisation,

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employer or company associated with
StrictlyBusinessPodcast.com.

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Assumptions made on the analyses are not
reflective of the position of any other

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entity other than the speaker or the
author.

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And since we are critically thinking human
beings, these views are always subject to

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change, revision,

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and rethinking at any time.

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Please do not hold us to them in
perpetuity.