“
ASSET ALLOCATOR ARMSTRONG INVESTMENT MANAGERS
You need
varying strategies
within each asset
class and different
management
approaches within
each asset class…
We believe asset
allocation is
responsible for
almost all the risk
of a portfolio and
almost all the
return potential
of a portfolio
”
Patrick Armstrong, joint
managing partner and head of
investment selection, Armstrong
Investment Managers
BY GARY SHEPHERD
It takes a plucky fund manager
to set out on his or her
own; those trained in scrutinising
the management of
companies as investments
are not always necessarily
the best at running a business
themselves.
It helps, of course, if you
are already used to your
own independence, a reality
that underpins Patrick
and Ana Cukic Armstrong’s
basis for forming Armstrong
Investment Managers,
having worked closely
together – alongside portfolio
manager Eugen Fostiak
– since 2000.
The trio set up the UBS
open architecture managed
accounts programmes in
2000, before moving to
Insight Investment Management
three years later.
Here they gained plaudits
for transitioning a traditional
fund of funds offering
in to a rebranded Multi
Asset Group and a range of
portfolios.
l Funds unveiled
Armstrong Investment
Managers was formally set
up in June 2009, with the
investment team bolstered
by quant and risk management
analyst Vlade Milanovic.
FSA approval for the
venture came in November,
with the first two funds –
the Irish-domiciled Diversified
Dynamic Solution and
the more cautiously positioned
UK Ucits III Diversified
Real Return – launched
in January this year.
“The firm is based on
the belief that diversification
is fundamental to control
portfolio volatility,”
says Patrick of the team’s
approach.
“You need varying strategies
within each asset
class and different management
approaches within
Taking the plunge
It is not often that multi-managers step out of the
secure environment of being part of an established
fund house and set up their own boutique. Following
the launch of their first funds, Patrick and Ana Cukic
Armstrong talk us through their multi-asset approach
each asset class – long
positions, short positions
and hedges, all of those
add real diversification. We
believe asset allocation is
responsible for almost all
the risk of a portfolio and
almost all the return potential
of a portfolio.
“We think we are very
differentiated from most
people in this space – we
do not just allocate say
30% to equities, 20% to
bonds and so on. We are
not in any asset class unless
we expect a return from it
and all positions are
designed to create a portfolio
with defined risk
characteristics.”
l Inflation strategy
Inflation is used as the
benchmark for the funds –
Euro Zone CPI + 7% pa for
Diversified Dynamic Solution
and UK RPI + 4% for
Diversified Real Return.
These are used in the belief
that, in the long term, most
investors aim for capital
growth in excess of inflation
with a control of
portfolio volatility a con-
cern in the short term.
However, the team does
remains fairly bearish on
the prospects for Western
economies and are concerned
about the threat of
inflation, particularly given
the long-term impact of
quantitative easing with
these governments’ priorities
seemingly focused on
avoiding a double-dip
recession rather than
anchoring inflation.
“How perfectly can they
fine tune and withdraw the
increased money supply
out of the system? That is
42 PORTFOLIO ADVISER [www.portfolio-adviser.com] MAY 2010
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