* Turning defensive ahead of markets’ deterioration
* Mulls over debut India fund
By Cecilia Valente
LONDON, July 29 (Reuters) - Pharmacist-turned-fund-manager Jayesh Manek is weighing up the launch of an India fund as the latest step in an idiosyncratic career that saw him thrust into fund management after winning a newspaper’s investment contest.
Manek’s professional life was turned around by chance in the mid-1990s after he won the Sunday Times’ Fantasy Fund Manager competition two years on the trot.
The victories prompted Manek, who owned a chain of eight high street chemist shops in North West London, at the time, to set up his own fund — Manek Growth LP60010456 — which has recently been delivering some strong returns. [ID:nLDE66514T]
Up to last Friday, his performance in 2010 puts him in the top 10 of more than 3,300 UK-registered equity funds tracked by Lipper. His gains of 24.65 percent in the year-to-date have come largely through investing in UK stocks at a time when the FTSE 100 .FTSE has fallen by close to 2 percent.
Now, however, 54-year-old Manek is looking to India to harness growth, as he prepares for more trouble in mature markets.
“The Indian market will offer tremendous opportunity in the next 10 to 15 years. There are (only) a few economies out there expanding that fast,” said Manek, who was born in Uganda but whose family came from the state of Gujarat in India. He is also a director on the India Value Investments fund run by ASK Investment Managers
“We have been looking at it for some time. The idea is to launch it at the right time, valuations now look a little stretched,” he said.
Diversification is something he could do with as he expects his Manek Growth fund to face a market correction in its core UK market, which he feels could even enter a double dip recession later this year.
“I expect the market to be very volatile in the next few months because of the bad situation in Europe, unemployment and other problems in the U.S. and few problems appearing in China. It is highly likely we might have a double dip,” he said.
In an attempt to recession-proof his portfolio, and not in homage to his previous career, Manek has increased allocation to pharma stocks AstraZeneca (AZN.L) and Glaxo (GSK.L), while continuing to avoid the construction sector as well as banks and “anything consumer-spending linked.”
He also likes Heritage Oil HOC.TO and exploration company Dana (DAN.N) among defensive picks, while looking for growth in companies like Blinkx BLNX.L, which are tapping the internet’s growing role as an entertainment medium.
Manek runs his fund from the North London suburb of Harrow, a far cry from the steel and glass towers of the city’s traditional financial centre or its upstart neighbour in the Docklands area to the east.
The humble location — a short walk from the centre of his former pharmacy empire — is a reminder that this used to be just a hobby for Manek, who began investing his own money in the 1980s without realising it could be turned into a viable career.
By the time he won the newsapaper competition in both 1994 and 1995, Manek had taken the back seat in running the chemists. Two years after launching the Growth fund, he sold the old business altogether, making fund management his only activity.
“I have always enjoyed researching stock, it is a new day every day, you are learning new things every day. From that point of view, it is a very rewarding thing,” he said.
His interest in the markets took hold in the 1970s, when he witnessed the impact the oil crisis of 1973, while a student at the School of Pharmacy in Brighton, on Britain’s south coast.
Investing in the 1980s, he says, was exhilarating.
“From 1980 to 2000, it was almost always a bull market, except the correction in 1987. My initial approach was very much driven by growth, because the UK offered a tremendous choice of growth stocks,” he said.
His philosophy has changed since to adjust to a lower-growth environment.
“It obviously became more challenging over the last 10 years. Stock selection became more important. At the same time, one needs to look at the overall macro scenario to try and protect the portfolio in a downturn; find a combination of stocks with very specific drivers and at the same time protecting against the downside,” he said.
At its peak in 2003, the fund had some 70 million pounds in assets but that has fallen to 40 million at the last count. (Editing by Joel Dimmock and Simon Jessop)