‘We’re not trying to pick winners, we’re trying to pick a portfolio that has a diversified spread’

It is very unusual these days to find people who have stayed at the same company for decades. But John Stopford has done just that. Head of multi-asset income at Ninety One (formerly Investec Asset Management), Stopford has been in the industry for 30 years, with 27 of those at Ninety One.

“I have been very fortunate in that I’ve found a home and an environment that suit me, and I have people I like to work with who feel the same,” he says.

As well as his role at the top for multi-asset, he manages the Ninety One Diversified Income, Cautious Managed and Global Multi-Asset Income funds.

Taking a closer look at the £1.4bn Ninety One Diversified Income fund, it is a multi-asset fund in its truest sense. The fund has more than 350 global holdings — either in fixed income or equities, as well as property and cash. Stopford explains that while the team owns more than 300 securities, they look at a universe of around 25,000.

To give an idea of how diversified the fund is and how it does not have large holdings, the top equity fund — Swiss healthcare group Roche Holdings — accounts for just 0.9 per cent of the fund. The top 10 equity holdings amount to just 7.9 per cent of the fund.

“We don’t want to own 5 per cent of a single stock and hope it’s a winner,” he says. “That’s not what we’re about. We’re not trying to have things that dominate risk, but characteristics that win in the long run.”

As of the end of October, the fund has 66 positions in equities while it owns 335 bonds. The fund is also geographically diverse with 28.7 per cent coming from emerging markets, 26.7 in the US, 16.5 per cent in Europe ex-UK, and other locations including the UK and the Far East.

The fund’s top bond holdings come from a broad range of countries — including New Zealand, Canada, South Africa and Mexico.

The average holding time for the fund differs, as the team can have some holdings that can be very long or others that can be short.

The team is made up of more than 20 people, all within research groups, while Stopford and Jason Borbora-Sheen are the lead managers, with Stopford having a background in fixed income and Borbora-Sheen in equity to complement each other.
All decisions are made in-house and the team do not outsource anything or ask other teams to run specific parts. “We select companies with the characteristics we want,” Stopford says.

“It is a pretty efficient setup, but it is very much bottom-up security selection, ultimately driving the return profile and then risk management on top.

“The fund looks to deliver a defensive total return driven primarily by income. We target what we think is an attractive level, of around 4 per cent. Then we deliver that with low volatility.”

Fund characteristics

One differentiation between this multi-asset fund and others on the market is that the team do not make big asset allocation calls.

“There is a huge universe out there across bonds, equities, listed properties and so on, which you can use to help deliver a return outcome. We look for particular characteristics for the fund, rather than just allocating to stocks we’ve found,” Stopford adds.

“Yield is one, but we’re not chasing yield for yield’s sake. We’re looking for securities where the underlying assets are capable of delivering resilient, sustainable income or cashflows to support said income.”

He says looking for stocks with those characteristics is “much more achievable” than getting asset allocation calls right all the time.

“We’re not trying to pick winners; we’re trying to pick a portfolio that has a broad and diversified spread aligned to the outcome we’re trying to achieve.”

When discussing the year’s events, it is near impossible to avoid talk of how Covid-19 has affected businesses. Stopford says that while there have been challenges, when it comes to technology it has just accentuated trends that were already happening. For example, he already did some working from home before 2020.

“The ability to work from home was there, but I think it will become more mainstream.”

Technology has had its positives as well as its limitations throughout the year.

“From a client perspective, it has been helpful in terms of interactions with existing clients because people have been relatively accessible,” Stopford says. “The challenge is with new client relationships where it is hard to build a rapport or a relationship via Zoom. It will be interesting to see how that develops. But for servicing existing clients it’s going to be a balance between physical meetings and Zoom.”

While the year has been uncertain with its numerous challenges, Stopford remains positive. “I’m optimistic that there’s light at the end of the tunnel.”