Angus Tulloch 'frustrated' by euro turmoil

Angus Tulloch has dismissed the notion that anything surprising will emerge from the latest euro summit in Brussels this weekend, and he admits to being frustrated by all the fallout from the crisis.

‘We just think it’s all noise and it’s going to be a long time before they come round to doing something radical. I don’t think they are ready, and I suspect we’ll just see sticking plasters,’ Tulloch said.

Tulloch will take back the reins of the Scottish Oriental Smaller Companies investment trust, which features in Citywire Selection, from Susie Rippingall in April, in an oversight role along with co-managers Wee-Li Hee and Scott McNab.

He has found the latest bout of uncertainty trying, with Asia far from immune from the volatility.

‘There is no doubt that what happens in Europe is having an influence on sentiment and confidence. I’m finding these markets extremely frustrating, there is so much out there that is tough to assess.’ This, though, has not changed their investment process with the team sticking to ‘what they know’ and buying quality.

Smaller companies pedigree

Tulloch has good pedigree in Asian smaller companies, with a quarter of his Asia Pacific fund invested in them. He was the original manager of this trust from 1995 until handing over the reins to Rippingall in 2001.

He believes investment trusts, with their closed-ended structure, are the only efficient way to run a smaller companies fund due to the lack of liquidity.

‘I wouldn’t like to run an open ended small cap fund, I would feel quite constrained. The two benefits of running an investment trust are that you can gear up and liquidity isn’t such a constraint’. However, that isn’t to suggest that they are investing in the most illiquid stocks, but rather cash-generative companies that would always find a price.

India on the up, but wary of China

Rippingall has been a very successful steward for the trust, and when asked what stamp the new managers would put on the fund Tulloch conceded that a greater overlap between his Asia Pacific fund would be likely, along with taking larger positions of more than 2% in some companies.

At a country level Hee conceded the large underweight position to India, which has significantly benefited performance in recent years, would likely change. ‘I suspect that I’m not as wary of India as Susie. There are some good names in India, and while they are more often than not expensive, I do have a higher appetite for valuations than Susie,’ Hee said.

Tulloch added that he felt India was one of the more interesting areas in smaller companies, outside the consumer areas, and that he had quite a few names in his Asia Pacific fund.

China is the largest part of the index and although the trust lists a 16% allocation to China, little or none of that is directly in China and more often than not based in Hong Kong.