Formed to much fanfare by chief executive officer Rupert Tyer and ex-Cazenove fund managers Tim Russell and Chris Rice in 2013, their real coup was hiring ex-colleague Julie Dean from Schroders last year.
As manager of the £116m TM Sanditon UK Fund, Dean is running just a fraction of the assets she was at Schroders – £4bn at the peak – though this, she says, is of little concern.
While conceding she was being “pulled in more directions” at Schroders, Dean asserts it was the appeal of working with Russell and Rice again, with whom she worked at Cazenove, that was the decisive factor in making the leap. Together, they are proponents of Russell’s trumpeted Business Cycle approach.
While Sanditon may only have 11 staff members on its payroll at present, Dean says this fits with the ethos behind Business Cycle investing. “You don’t need huge teams of people to make an investment decision; but you need to understand where you are in the business cycle and how the correlation of returns between stocks at different stages of the cycle behaves,” she explains.
“Because of that a lot of the variability in stock price performance is to some extent predictable. The joy of this job is making decisions, getting it right and beating the market.”
For a more formal definition, Dean says the Business Cycle approach is “about understanding how the operational leverage at cyclical businesses affects the variability of profits and cashflow growth over a cycle, and understanding how share price performance reflects that.”
She continues: “It’s really about understanding correlations between different types of company at different stages of the cycle and understanding relative values across the market.
“That’s why it is not a structure that lends itself to sectoral analysis. There are some sectors in the UK market in which you can have value-defensive and growth-defensive stocks – market sector divides are not homogenous.”
Despite the market volatility this summer, Dean still believes it was the right time to launch the UK fund. Defensive stocks are at the forefront of Dean’s thinking at present, particularly given her view that the economic cycle is now in its slowdown phase.