James de Uphaugh urged investors to look through Majedie Asset Management's short-term performance travails and instead focus on the firm's long-term record of generating returns, as he set out plans to turn around the "prestigious" £808m Edinburgh Investment Trust mandate the firm took on in March.
Investment company analysts and buyers spoke of their surprise over the decision of Edinburgh's board to select Majedie to replace Invesco as the boutique's open-ended funds had seen a period of poor performance to rival former manager Mark Barnett's.
None of Majedie's UK equity funds have beaten the FTSE All-Share index's 13.3% gains in the five years to 29 July, according to FE fundinfo, with Majedie UK Focus's 13.25% the closest the firm has got. Majedie UK Equity, which de Uphaugh is a named co-manager on, has returned just 3.8%.
But Majedie's executive chairman and CIO de Uphaugh told Investment Week that while it was "right to say that over the recent past some of the open-ended funds have not performed quite as well as we would like", investors should "broaden that out" over a longer period.
"The Edinburgh board, in conjunction with their advisors Willis Towers Watson and Investec, looked in great, granular detail at the long-term record [of Majedie]," de Uphaugh said.
"For a trust such as this, founded a long time ago [that] reeks of long termism, what you need to do is look at the long-term record of the manager and the firm that you're appointing. That's just what they did.
"My record since 2006 is of the order of 2.6% outperformance over the period per annum. That is a credible long-term track record of outperformance that attracted the board to Majedie, particularly given that it was based off a team-based collegiate approach with lots of challenge from a team that had coherence and longevity."
In the 15 years to 29 July, Majedie's UK Focus and UK Equity funds have gained 282.7% and 189% respectively, ahead of the benchmark's 119.7%.
'Measured start' made
Majedie took over the trust in March, working with BlackRock as a transition manager to move to a portfolio de Uphaugh was happy with, a process that took around three weeks. BlackRock's expertise, as "something of a flow monster" helped to minimise transaction costs involved with the repositioning.
De Uphaugh said that while it was "obviously quite an interesting time to be taking over a mandate, with the incredible volatility that was there", "the good news is we have made a measured start to the mandate itself".
Since Majedie took over, Edinburgh has lost 11.7% in total share price return terms, compared to the FTSE All-Share's 9.6% loss and sector peers' 16.4% decline.
"Success in this very prestigious mandate for Majedie will be determined by two things: obviously the outperformance of the net asset value, but also endeavouring to narrow the discount," de Uphaugh continued.
"I am keen that we move the discount back to a more respectable level, and obviously I have aspirations to narrow it yet further. This is a long-term project for me and one which I'm already aligned to in having bought some shares."
While the initial priority for de Uphaugh's team was to ensure the firms in the portfolio were "well financed to get from A to B", the next challenge, he said, was to workout "which companies could emerge stronger" from the crisis.
"Yes, we are going to see different chapters in this health and economic crisis, but the reality is that as we emerge, the competitive landscape in each industry is going to be radically different," the CIO explained.