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Mistakes made, lessons learned

FSA asked investment professionals from Stratton Street, Jupiter AM, Standard Life Investments and OMGI to reveal a past investing mistake and explain what they have learned from it.
by Fund Selector Asia
Anthony Gillham, co-investment director for Old Mutual Global Investors’ multi-asset unit

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Gillham highlighted the importance of managing liquidity in a fixed income portfolio.

In 2015, his fund had chunky positions in UK commercial property, which proved to be a problem when the Brexit referendum approached.

“I had an inkling that the Brexit vote was going to go the way that the Brexit vote went. What I didn’t know was that getting rid of a 15% position in commercial property was going to take some time.”

Gillham said that even before the Brexit vote, he had difficulty in getting rid of his commercial property position, adding that he spent a lot of time selling it down.

“And when we got that Brexit vote, other managers perhaps hadn’t taken the same steps that we’d taken panicked and got out of that market.”

Gilliam said he learned to be more cautious about managing the liquidity in all his portfolios.

“Making sure that you have positions in your portfolio that you can actually get out of I think is very important,” he said, adding that it is something every bond investor should have learned after the financial crisis.

“Whilst it might seem a good idea to take a liquidity premium, when your environment changes, if you are unable to reverse out of that position, then there will be a problem.”

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