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Speaking to Investment Week, John Husselbee explains the high-conviction approach that has lead the City Financial MultiManager Income Fund to be a cautious managed sector leader.

Victoria Kelly for Investment Week writes:

“It is all about people's definition of risk," said John Husselbee, manager of the City Financial MM Income fund. "Risk is different from one person to another."

Husselbee adopts a high-conviction approach to managing the City Financial MM Income fund, exploiting the new-found flexibility under Ucits III rules to invest in a broad range of assets including property, funds of hedge funds and ETFs. He uses the latter to invest directly in commodities like gold and food.

Husselbee said he is willing to make strong asset allocation calls if markets conditions dictate, although he prefers to stay close to the 60% equity limit to maximise returns. "I am prepared to stick very firmly on the edges of the guidelines if necessary," he said.

Within the equity portion of the fund, a significant chunk is allocated to emerging markets like China and Russia through third party funds, a decision he said has driven recent performance.

The £24m fund, which Husselbee has run since July 2004, is fourth in the sector over three years, returning 27.7% on a bid to bid basis, and first over five years with a return of 108.7%, according to figures from Morningstar. This compares to a sector average of 14.6% and 37.9% over three and five years respectively.

[In preparing this article the author used performance data available from Morningstar. The three-year performance figures which are usually cited by City Financial for comparison within Investment Management Association fund sectors come from Lipper and will not be available for the City Financial MultiManager Income Fund until after July 2008 because the Fund only entered the IMA’s Cautious Managed Sector in mid-2005.]

For more information about the City Financial MultiManager Income Fund click here.