You might not want to be exposed to the index, but we can choose from around 600 companies and construct a portfolio with no UK exposure if that’s what we want to do.
Over the past 12 months we have shifted the portfolio quite significantly to more overseas earnings. We have tended to buy US‑facing firms such as Ashtead, the plant rental company, which has 90pc of its profits coming from America.
We do invest in FTSE 100 stocks too, where we’ve followed the companies for a number of years and they get promoted into the top index. At the moment 14pc of the fund is in FTSE 100 stocks.
Do you have your own money invested in the fund?
Yes, both I and my wife have significant amounts invested.
What would you have done if you hadn’t become a fund manger?
In my dreams I’d be an international sportsman.
I studied chemistry at Oxford and after a year of research I realised that you can spend 10 years trying to achieve something in science and it all comes to nothing.
Fund management is very competitive and that suits me – I come in every morning and try to make sure my fund beats everyone else’s.
Independent view
This fund is managed by Luke Kerr, who joined Old Mutual Global Investors in 2001. He sits within OMGI’s highly respected UK mid and small-cap team, which includes Richard Watts and Dan Nickols, who have many years of market experience.
Mr Kerr takes both long and short positions, mainly outside the FTSE 100 index.
This means that he tends to avoid the UK’s 100 largest companies and instead searches what are termed medium and smaller-sized companies for ideas.
Taking a “long” position means investing in shares with the view that they will rise in value over time. Taking a short position is essentially the opposite. An investment is made that rises in value as a company’s share price falls.
While investing in medium and smaller-sized companies and using “shorts” can add significant value, both increase the risk of an investment strategy.
Mr Kerr has run this fund since launch in 2009 and over this time has generated an impressive level of performance when compared with the FTSE 250 index (the next 250 largest companies following the FTSE 100).
However, this success has meant that assets under management have risen, which has in the past led to the fund closing. While it is currently open, its capacity is monitored closely.
The charges investors pay for accessing this strategy are high. There is both a higher than normal annual management charge and a fairly hefty performance fee in place, the latter of which can materially add to annual costs.
As a result it is crucial that investors make sure they know what they are getting, in terms of both risks and costs. However, there are times when a premium deserves to be paid.
Authored by Andrew Johnston, senior investment research analyst, at Square Mile, the fund research company