Church House: six funds designed with the investor in mind

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When looking around for which investment trust or fund to buy, some investors may have felt that none particularly suited their needs.


Many funds are created to access a specific market or to fit a certain sector remit.


Church House Investment Management’s name may not be the most well-known but for many investors their range of funds may appear to have been designed especially with them in mind.


As if to prove this point, the company’s Tenax Absolute Return Strategies Fund was created specifically for a single client who sold his business and wanted somewhere safe for his money that would also generate an annual income.


What’s more, chief executive James Mahon, who is also joint chief investment officer and co-manages the Tenax fund, has pretty much his entire pension invested there.


Part of the reason for the company’s lower profile is simply due to the fact that Mahon, a City veteran of firms such as Hoare Govett and Archdale Securities, has concentrated Church House’s focus on just six funds since he co-founded the business just before the turn of the millennium.


What’s more, until the past few years the funds were not open to retail investors, having been run only for its wealth management clients.


“Church House didn’t set out to be a retail asset manager, so it’s never been our aim to populate all the different fund sectors,” says sales director Sam Liddle.


“Our funds are designed for clients, so in many cases they don’t necessarily fit precisely within the Investment Association sectors.”


Liddle, whose own distinguished City career has included setting up retail and discretionary management divisions at the likes of Morgan Grenfell and Singer & Friedlander and managing funds at Miton, led the process to launch a managed portfolio service and open up the six funds to the retail investor market in 2014, making the funds available across most investment platforms.


“While we opened up to the retail market, we’ve stuck to our guns,” says Liddle, saying the private client business is still running successfully and the managed portfolio service offers portfolios with risk grades from two to eight.


“There were no changes in the way that funds were managed, no new funds were launched, and the funds continue to carry on as they were; the ethos is unchanged.”


As when the company first set out, the priority remains to manage risk first, with returns a close second.


Looking across the sextet, the Tenax Absolute Return Fund is the lowest-risk fund and is probably the best known of the stable at close to GBP0.5bn.


It offers the “steady long-term growth” that makes it suitable for the boss’s pension, with some investments in equities and private equity but the balance in money market instruments, fixed income and low risk investments.


Also at the lower-volatility end is the Church House Investment Grade Fixed Interest Fund, which as Liddle says, does not really fit in the sterling corporate bond sector where it has been placed by the Investment Association, as unlike others there it has restrictions to control volatility and risk.


Its emphasis on providing a good yield and a steady return means it should be interesting for investors who are looking for risk diversification.


At the other end of the scale and for investors who want to play the UK recovery story, there’s the Church House UK Equity Growth Fund, which only opened to external investors last year. It has a core holding of large-cap UK stocks, with an investment focus on companies with strong management teams.


“The focus here is on very high quality businesses, so we won’t invest much in companies where we can’t see a clear route to profits, like tech start-ups,” says Liddle.


For those looking to spread the geographical risk, the Esk Global Equity Fund is similarly looking for quality large cap companies but has no constraints over the countries and sectors in which it finds them.


Finally, in the middle of the road in terms of risk, is the Balanced Equity Income Fund, which seeks to deliver long-term capital growth together with a rising income.


Church House also in recent years considered launching an ESG fund but managers felt there was no need as this was already baked into all the funds.


“We have always invested in companies with proper sustainable business models, run by people with integrity,” says Liddle. “As long-term investors, we have an interest in companies that operate sound corporate governance, as we have always done, and we steer clear of companies that we consider to be morally questionable.”


The company’s attitude to ESG fits in nicely with the steady-wins-the-race approach of most of its funds.


“The whole approach is the tortoise rather than the hare,” says Liddle.


“We’re all about long term gains, not interested in quarterly investment rankings. Our interest is in our clients and investors.”

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