Tried and tested triumphs over change

Simon Brooks, the manager of Balanced Managed, says despite high-profile departures the team’s investment style remains consistent and the fund has outpaced the benchmark.

The LV= Balanced Managed fund underwent several changes over the past year.

Top of these was the departure of Tom Caddick, the previous manager, who left with Toby Vaughan to join Santander in October 2010. This upheaval could have stoked fears of a shift in management style on the fund but Simon Brooks, who took over as the lead manager, says he moved swiftly to quash any doubts.

“One of the things that I have learnt is never to forget who your end customer is,” he says. “When Tom and Toby left we had to show that it was business as usual and that LVAM was much more than two people.” (article continues below)

Brooks is supported on the fund by Piers Hillier, the group’s chief investment officer, while LVAM awaits the arrival of Richard Timberlake and Paul Kim from FundQuest to join the multi-manager team. The interim period, however, has not been a completely quiet one.

“We think Neil been constrained by the size of the fund at the moment so that more flexible managers are outperforming,” he says. “We’re still overweight Britain. Our core allocation is split between the Aegon UK Equity fund and the BlackRock UK fund, which we added in June last year.”

For both Japan and Europe the manager has been putting money into funds that offer hedged share classes. In the case of Japan this is because of the strong medium-term rally of the yen against sterling, while for Europe the hedged share class reflects uncertainty over the single currency.

“Our core European exposure is through the LV= European ex UK Growth,” Brooks says. “Despite the problems in the region there are still a lot of good companies at relatively cheap valuations so we switched out of the normal share class into a hedged share class so investors didn’t take on the currency risk.”

A recent cause for concern, however, has come from China where inflation pressures appear to be building prompting fears of policy tightening.

“We are cautious over the inflation fears and policy risk, but with the broader economic shift from west to east there is a danger of pulling back too early,” says Brooks

So far the fund has performed well returning 11.13% against an Investment Management Association Balanced Managed average return of 10.41% over three years to January 17, according to Financial Express. Brooks will be hoping that the arrival of the new team this year helps to build on its recent performance.