Rehab services gain as great investment race resumes
AFTER TAKING a break in 2009, the Rehab Great Investment Race is back again this year.
The fundraising campaign, which launched in 2001, is an innovative way for those in the investment fund industry to do their bit for charity.
Five Irish investment fund managers are given €100,000 to invest over a 12-month period. The proceeds go to Rehab’s autism services.
Atlantic Philanthropies, the charity founded by US billionaire Chuck Feeney, provided the initial capital investment in the scheme, in 2001, of €600,000.
Since 2001, five races have taken place, raising a total of almost €870,000 for the charity.
This year the teams are: Irish Life Investment Managers (ILIM), Merrion Investment Managers , AIB Investment Managers, and Kleinwort Benson Investors, while a Rehab team is entering the race for the first time, led by former fund manager Frank O’Brien.
Results for November – the first month of this year’s race – showed that most competitors benefited from the strong performance by markets during the month.
Four of the fund managers delivered a positive return, though the two best performers were a full 8 per cent ahead of the other three.
Leading the way was Merrion Investment Managers, with an impressive plus 11.3 per cent return for the month. A focus on building exposure to the basic materials sector was a key strategy for the fund, according to fund manager Stephen Hynes.
The fund invested in stocks in this sector through an ETF (exchange traded fund), an investment vehicle that allows investors to gain individual exposures rather than individual stocks.
In addition, it bought some individual equities such as Yara International, a Norwegian agri-chemical company. An ETF in the overall market also allowed it to gain exposure to the general market.
Second in line was Kleinwort Benson Investors which grew by just under 9 per cent during the month.
Fund manager Noel O’Halloran explained that the fund invested in six to seven stocks, each of which were of approximately equal value in the portfolio.
“Because of the positive performance of the market generally, it wasn’t a very defensive structure, facing on more cyclical names rather than defensive stocks.”
Kleinwort Benson’s strategy focuses on three main sectors – emerging markets, new technologies, and water and agri companies. An investment in China Valve Technology, a Chinese-based valve manufacturer specialising in hydraulics, yielded a 23 per cent increase in the month, with the investment value growing from €20,000 to €24,600. Similarly, a €10,000 outlay on US water consultancy and engineering company Tetra Tech finished the month at €11,700, up 17 per cent.
Other individual companies invested in by Kleinwort Benson in the month were Swiss agri-fertiliser company Syngenta and Hong Kong jeweller, Chow Sang Sang.
Irish Life Investment Managers was the next best performer, though it succeeded in increasing its investment by just 0.7 per cent.
Heading up the fund was Seamus Magner, who focused on Irish and UK equities, with a small exposure to the US.
It bought and sold a range of stocks in the month, but took a “gentle” approach due to the uncertainty of the market, according to Mr Magner.
Among the stocks invested in were Irish company DCC, which has a range of interests from heating oil to computer games, and Norkom Technologies.
ILIM bought the financial services software stock after the company announced it was in takeover discussions. Other investment targets were UK oil-services company Bowleven and General Motors.
AIB Investment Managers, led by Joseph Harrigan, came in half a per cent behind ILIM, finishing the month fractionally higher with a return of plus 0.2 per cent.
AIB also took a three-pronged strategy, focusing on exposure to emerging markets, avoiding weakness in Europe in terms of currency and economics, and (mindful of the charity aspect of the exercise) diversifying the portfolio to avoid excessive risk-taking.
The fund invested heavily in Japanese stocks, which looked less expensive, Mr Harrigan said. Specific companies invested in included Musashi Shimizu-Seimitsu, an auto supplier which is benefitting from exposure to the thriving motorcycle industry in Indonesia.
AIB left 40 per cent of its fund in US dollars for a good share of the month to take advantage of the weakening euro.
The Rehab team delivered a negative return of minus 1.4 per cent. Frank O’Brien, who is heading up the fund, said the focus this month was to build up a range of high-quality stock with strong volume growth, and to have some exposure to emerging markets.
Among the specific stocks invested in were Unilever, brewer SABMiller, Royal Dutch Shell, Tesco and Next.
Mr O’Brien said the fund wasn’t ready to start investing at the beginning of November, and hence missed the first week of the month which saw a strong performance by markets.
The fund is since above water, he points out. Whether this trend will continue will be revealed in next month’s update.