The key factors behind Cornelian's private client outperformance

Stock picks in the small and mid-cap area helped boost the performance of Cornelian Asset Manager's private client portfolios over the past year, according to head of investment management and private clients Marcus Brooks.

‘We have been overweight equities and the Far East and emerging markets, which has been helpful. Exposure to UK small and mid-caps has also been helpful. The main negative was not being in riskier financials or highly geared and cyclical companies in general. Financials recovered substantially in the middle of the third quarter last year, but not having too much exposure to banks in the fourth quarter helped,’ Brooks said.

Edinburgh-based Brooks (above) highlights Hill & Smith, a galvanised steel supplier, and infrastructure services company May Gurney and Umeco, which specialises in distribution and supply chain management for the aerospace and defence industries, as key contributors to performance. He said these stocks, alongside a number of others in a medium-risk private client portfolio, have risen more than 100% from their lows earlier last year.

Holding Cadbury also proved lucrative for Cornelian private clients. Brooks manages the CF Cornelian Growth fund and sold out of the chocolate manufacturer in early January having held the stock for around five years.

Over the 12 months to the end of December, an average medium-risk private client portfolio at Cornelian has returned around 22%, while the Apcims Balanced benchmark was up 16.7% over the same period.

Brooks believes the CF Cornelian Growth fund, which sits in the IMA Balanced Managed sector, is reflective of a medium-risk private client portfolio at the firm, ironically more so than the lower risk CF Cornelian Balanced fund, which sits in the IMA Cautious Managed sector. Over the 12 months to the end of January, the fund has returned 25.5% but over the past three years it is down 1.8%.

The firm currently has £366 million under management, of which 50% is in discretionary private client portfolios, 20% in the Cornelian fund range, 14% in charity assets with the remainder in pension funds.

Global themes

The global agricultural super-cycle, gold and the development of environmental technology feature among the longer term themes that Cornelian Asset Management’s private client team is currently pursuing.

Exposure is gained through specialist funds, which include the Sarasin AgriSar, Impax Environmental Markets and the CF Ruffer Baker Steel Gold funds, representing 7% of the private client team’s 29% overall allocation towards international equities.