Building a fund
Every investor wants to build a successful portfolio. Being able to choose the right stocks for the portfolio is the key to this. We speak with Tim Gregory, Chief Investment Manager of Vermeer Investment Management about how he built his fund.
The Vermeer Investment Management fund was launched in December 2016. This was bang in the middle of the Trump trade. A tough time to work out if there was still room for growth. Tim made a decision that rather than investing in a concentrated portfolio of 30 stocks, they decided to use a balanced approach with 60 stocks. Some of the trades that had been so hot they thought it was still a good opportunity, but had to hedge the portfolio for safety.
Managing the money
When creating a fund, initial investment size is a large element of importance. The Vermeer fund is only a £5.5 million fund. However it is a very scale-able fund. They hold a wide range of market cap opportunities. Importantly for its diminutive size the portfolio manages money deliberately as if the fund was much larger.
A fund should be made from a diverse range of equities to allow room for growth in various sectors. Tim tells us that the fund is constructed from large cap to mid cap stocks in various sectors. Tim tells us about one of his favoured stocks. Xylem, a US listed water solution company with a $12 billion market cap. They provide water solutions globally. This gives exposure to both China and India. Both of whom are investing heavily in water.
Exposure levels are important in a portfolio. Tim tells us that the largest exposure is 5% currently, but could be up to 6% – This is in Microsoft. However the fund tends to not go below 1%. In terms of market cap, they would consider a small cap company. It would not be initiated at a larger size than 2% though.