Pearson Lund would go straight back into the market

He compares markets now to those of 1975. He had worked for private clients at Cazenove, and moved on to Antony Gibbs Investment Management when the FTSE fell 55% in 1974. It then rose 140% the following year.

Pearson Lund leaves the financial industry after the UK market rose 21.3% in 2009 - but with memories of 2008’s drop of 32% fresh in investors’ minds.

He says: “As a young chap in 1975, you looked at markets and thought 1974 had been so horrendous, it was a one way bet. If I was 25 again, it would be a great time to come back into the business, because it has it all going for it now, too.”

But Pearson Lund adds Ucits III funds that profit, or at least limit losses when markets fall, too, could rank among the best funds over the coming five years.

“Ucits III funds provide the greater opportunities to get it right. I would not be surprised if some of the top 10 funds in five years include Ucits funds that got it right. But the bottom performers will be those that got it wrong.

“The judicious use of derivatives in funds can enhance results, but they are dangerous things in the wrong hands.”

He adds that core strategies such as UK equity income, global equities and bond portfolios which form part of the £900m assets at the fund unit of Rathbones, still have a place in clients’ portfolios.

Equities markets have risen modestly since 1999, when he joined the unit, but he says: “I am sure history will show, if you leave money on deposit now you will get left behind quickly, especially now rates are pitiable.” 

Pearson Lund cautions, however, against jumping hastily into niche strategies focusing on specific countries or sectors “which can do well for one or two years, but then maybe dry up.

“The main UK, all-sector funds have done well attracting new net money, in no small part due to IFAs,” he says.

The unit trust industry has grown from 85 managers running £2.5bn in open-ended retail funds in 1975 to 109 managers in charge of £481bn by the start of this year.

Pearson Lund was a key reason UK retail investor horizons expanded beyond closed-ended trusts back then, after he recognised opportunities to market an open-ended product from M&G in his job filing investor reports at a broking firm in the 1970s.

“I wondered, could we not do something with this? It was quite well packaged, but without marketing or promotion, it was somewhat hidden away.”

Categories: Investment Trusts | Equities

Tags: Rathbones

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