After the gruelling conditions experienced during the last contest, the Rehab Great Investment Race got off to a much brighter start this time.
Just days after this year's race began in mid-October, the gloom that has pervaded global stock markets lifted and share prices staged the most sustained rally seen in quite some time.
"We were lucky with the timing," said Mr Dara Fitzgerald of Hibernian Investment Managers. "After a terrible summer and a terrible year, the race started and a couple of days later the markets turned around."
Over the first six weeks of the race, the ISEQ was up by almost 16 per cent, the Dow added 13 per cent while technology and telecom stocks were among the biggest beneficiaries as the Nasdaq surged by 22 per cent. Consequently, all six of the fund managers in this year's race made money and the overall pot was 9 per cent ahead after the first few weeks of the race.
In the contest, six teams of fund managers are armed with €100,000 each and pitted against the market, and each other, for one year. The aim is to make as much money as possible, with all profits going to the Rehab Group.
According to Mercer, the official monitors of the race, Bank of Ireland Asset Management (BIAM) topped the score sheet at the end of November with an impressive return of 23 per cent.
BIAM's Mr Chris Reilly stuck to the same strategy that served him well in the last race, investing in lowly rated second-line Irish stocks. His 23 per cent return was delivered by just three shares - Grafton, Greencore and Independent News & Media. He sold Grafton after two days, making a gain of 8 per cent, while Independent shares delivered a return of nearly 11 per cent when they were sold in late October.
Mr Reilly now holds just Greencore, which he bought at €2.59. "I think the shares are cheap at eight times earnings with a high yield and given that the business has been turned around," he said.
Hibernian, which held second place at the end of November with a return of 11.2 per cent, and Irish Life, which managed a gain of 10.7 per cent on its portfolio, are also sticking with their tried and tested strategies from the last race.
According to Mr Fitzgerald, Hibernian continued with a policy of switching between its own funds over the period. Its money was first put into Irish equities but switched into a bond fund in early November. "We're not convinced it's all over yet," he said, referring to the hammering equity markets have taken this year. "Investors are still very nervous."
At Irish Life, Mr Seamus Magner stuck with an active trading strategy in which Irish stocks featured quite highly. However, it was Finnish mobile phone provider Nokia that proved his best performer over the period.
By contrast, Setanta has abandoned the approach which confined it to a single equity fund in the last race. This time, it plans to invest directly in selected international stocks, an approach that has yielded 5.1 per cent so far.
Meanwhile, the two new entrants to this year's race are finding their feet. Montgomery Oppenheim didn't rush into anything, waiting until mid- November before investing 70 per cent of its cash in its global equity fund. This is fairly evenly split between Irish, UK, European and US equities and returned 3.4 per cent over the two-week period.
KBC is focusing on capital preservation. Some 70 per cent of its cash went into a fixed interest fund with a further 25 per cent split between a global equity fund and a Far East equity fund.
jmosullivan@irish-times.ie
