The Downing fund-of-funds team are always fishing around for bargains and their latest update is no exception. 

Last time out we covered manager Simon Evan Cook’s penchant for investment boutiques as we revealed he had bought into several smaller funds at the startof 2024. 

And they’ve added a couple more little ‘uns as the year has progressed.

First up, they’ve added AVI Global Special Situations, which they backed upon its recent launch in April 2024, spinning out the AVI Global trust into open-ended form. 

“Manager Joe Bauernfreund and the team have a really differentiated approach to value investing, specialising in analysing complex companies that other investors might shy away from, which they believe gives them a better chance of finding a bargain,” said manager Alex Paget. 

“They assess the value of the assets within the company, looking for those that are undervalued, but also assess other factors to make sure they are buying good-quality, growing businesses.”

The fund has garnered just over £15mn in backing since launch, compared with its £1.3bn trust.

Paget and his colleague Evan Cook have also bought into Heriot Global Smaller Companies, which launched in 2021 and is run by Dundas. 

They are fans of their ‘genuinely collegiate approach’ and their willingness to pay out dividends. 

Thirdly, Downing has invested in Tyndall Unconstrained UK Income run by Simon Murphy, who Paget describes as a “proper stock picker who manages a concentrated portfolio and, thanks to the virtues of working at a boutique, can take a genuine long-term view.”

Combined, these three funds have a total size of £63mn.

And he added that outside of equities, nothing has changed, and as such they limit the defensive side of their strategies to exclusively cash and government bonds.

“There is nothing wrong with corporate bonds, emerging market debt, alternatives, but they are not defensive when you need them to be,” he said. “As in, when equities really fall, you can be sure those assets will fall with them.”

In practice their defensive component translates to 40 per cent in cash and money market funds, 20 per cent in shorter-dated government bonds, and 40 per cent in longer dated government bonds with duration around four years.