Merrion team wins Rehab investment competition

MERRION INVESTMENT Managers has won this year’s Rehab Great Investment Race.

The initiative, which gives five fund managers €100,000 to invest over a 12-month period on behalf of Rehab, raised €38,747 for the charity, representing an 8 per cent return on the initial €500,000 investment.

Presenting the award, Niall O'Farrell, of RTÉ's Dragons' Denand founder of Blacktie, praised the participating fund managers' combination of "institutional charity and commercial sense".

He also welcomed the 8 per cent return, achieved during a period of extreme market volatility.

Merrion Investment Managers delivered an exceptional 52 per cent return on the year.

Despite a dip in February and March due to its exposure to Aer Lingus, it was consistently ahead since the race began last November.

According to Merrion, the strong portfolio performance was due to the fact the fund adopted a tactical rather than buy-and-hold strategy as it responded to this year’s market volatility.

The fund benefited from a number of shorter-term trades, while the key contributors included mining company BHP Billiton; agricultural stock Yara International, which produces agricultural fertilizers; Brenntag, the German chemical company; and steel producer ArcelorMittal.

Merrion finished up 1.6 per cent in the final month of the race, as it de-risked the portfolio and sold its remaining holding, leaving it in third place in terms of October’s performance. While Irish Life Investment Managers and Kleinwort Benson alternated in terms of second and third places throughout the year, Irish Life Investment Managers ultimately finished in second place.

The fund, which focused on Irish and UK equities, advanced an impressive 15.7 per cent on the year, finishing in October in second place with a 2.2 per cent return on the month.

Kleinwort Benson, which focused on emerging markets, new technologies, and water and agri companies, also put in a strong performance.

It made a strong start, beginning the year in second place, though was eventually eclipsed by Irish Life Investment Managers. However, it surged in the last month of the race, finishing October in first place with a return of 15.7 per cent.

Rehab’s own team, led by Frank O’Brien, finished in fourth place, returning a steady 2.7 per cent on the year. The fund manager took a relatively passive approach during the year, investing in a range of well-known, high-quality stocks such as Unilever, Tesco, CRH SABMiller, Royal Dutch Shell, Tesco and Next.

AIB Investment Managers finished the race in fifth place, with a return of -37.2 per cent. The fund suffered as a result of its focus on Japanese equities, which were badly affected by the earthquake and tsunami earlier this year. Among the stocks invested in during the year were Hitachi, Nichicon, Toyota and Cairn Energy.