Anthony Bolton is an investor who looks at individual stocks and invests where he sees unrecognised value (a bottom-up investor), rather than first allocating funds to sectors or countries before selecting stocks for the portfolio.
He certainly does not agree with the logic of allocating money to a sector simply because other investors are enthusiastic about it and have bid up the prices, resulting in it becoming a high proportion of the overall market.
For example, he refused to allocate much money to the dot.com, telecom and media sectors in 1999 when other fund managers felt obliged to take part.
But keep a balance
Despite this he acknowledges the need to keep an overall balance within the portfolio so that it does not become too heavily weighted on a theme, sector or a market.
His rules for this are that,
(a) an individual holding should not exceed 4 per cent of the total fund, except in very rare circumstances;
(b) he should not be more than 30 per cent overweight in any one sector, and
(c) he should not hold more than 15 per cent of a company’s equity.
Within these rules the size of his bet on an individual share depends on his ‘conviction level’ for the stock, how risky it is and how marketable it is.
For his Special Situat
I'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk
investing is about making the right decisions, not many decisions.