Gosden is reluctant to talk about specific stocks but, in terms of sectors, he likes financials and oil shares. He dislikes miners that have had 18 months of “tremendous” stock performance and is not keen on housebuilders and consumer staples for the same reason.
Does he think this is a contrarian view? “I think it is, but we are starting a brand new portfolio from scratch so would we launch a portfolio with huge capital gain in it? It doesn’t make any sense to do that.
“Initially, the fund might not look in vogue but I don’t worry because you want to be owning investments people come to when they say, ‘I have made enough money in my housebuilder, I’m selling; what do I buy next?’.”
He concedes this approach leaves the portfolio more domestically-focused than most, but he is not fazed by launching a new fund with these stocks in a relatively crowded peer group that has seen success for some, but not other, big names.
“It is completely the contrary, it is a brand new fund and people like that, and I have 20 years’ experience – that is not common on a newly-launched product.”
Given the wide disparity of performance in the sector, Gosden believes there is a chance the fund will appeal to those whose manager disappointed this year.
“They will either know me for what I do and know the returns I produce and the volatility I produce it by. Some people will like the way we articulate things and the candour in our meetings.
“Some might be coming to the end of the road with their manager because they are leaving, performance is poor or because they think they are not going to get it right going forward.”
Built to order
A number of factors lured Gosden to GAM including the firm’s listed nature and strong balance sheet, its leading position on regulation and fund pricing and, importantly, the fact that it did not already run a UK equity income fund before he joined.
Above all, however, it gave him the chance to do what he does best: build something from scratch. This, he says, was far more appealing than the offers he received from other fund groups to “mend some broken income funds”.
“It is in my DNA to build things,” he adds. “You have to commit to them, you can’t go around building things and vanishing two years later. You have to be committed with clients’ capital. If you are not, you have no credibility whatsoever.”
In fact, Gosden has vowed this will be the last UK equity income fund he ever runs.
GAM will move to new offices in Finsbury Circus during the first quarter of 2019. Perhaps leaving the St James’s district behind will finally be the point at which Gosden relinquishes his Artemis roots and makes a go of it with GAM.
To use a cliché, time will tell, but he certainly seems to have the enthusiasm and drive to make a mark with this fund.
He says: “It is quite easy to sit there and become fat and happy because it is a very lucrative industry, so to hit something with energy and endeavour is the fun bit of the job.
“I am 47 years old and to have something new to go at is genuinely exciting and I feel really invigorated; much more than I have been historically because it was not always possible running the second-largest income fund in the market to do all I wanted.
“I’m seeing companies I haven’t invested in for years, and it is really exciting.”
Fund selector’s view: Ryan Hughes, head of fund selection, AJ Bell Investments
“Adrian Gosden built up a strong reputation during his time at Artemis and his new fund will follow many of the same principles. Focusing on free cashflow, Gosden looks at companies that have an ability to pay sustainable dividends and have good management.
“Interestingly, the fund will focus on having 50% in large-cap stocks and 50% in mid and smaller companies, which given the fund’s small size initially will enable it to be flexible in a way the big five funds in the sector cannot. This will limit overall capacity but ensure a focus on returns and an adherence to the philosophy and process.
“Gosden is clearly motivated to succeed with this new fund and is open about this being the last fund he manages. With a small and focused team, a small amount of assets and a flexible approach, this fund takes Gosden back to the approach he had earlier in his career. The ability to access mid and smaller companies makes it an interesting diversifier to the established stars in this sector and is one to watch.”
