Paul Ilott, Managing Director of Scopic Research, analyses the Hawksmoor Vanbrugh Fund across a series of risk-on and risk-off market periods, assessing whether its performance was consistent with the team’s investment approach and portfolio construction.
Scopic Research conducts performance reviews on multi asset funds by breaking down the year under review into separate risk-on and risk-off periods.
The performance reviews then discuss how the multi-asset fund performed during each of these periods and suggests whether the strength or weakness in its returns during each could have been anticipated given the portfolio team’s approach, the instruments it uses, and the team’s preferences.
In other words, has the multi asset fund’s performance been consistent with what we might have expected?
This article is looking at: Hawksmoor Vanbrugh Fund
Investment Outcome: Seeks to invest globally and thematically with a view to achieving returns above the rate of inflation (UK CPI) over the longer term. A key differentiator is the potentially significant exposure to investment trusts – some of which exhibit idiosyncratic sources of risk and return.
Team: Ben Conway, Daniel Lockyer, Ben Mackie, and Dan Cartridge.
AUM: £215.5 million (as at 14-Oct-26)
Launch: 18-Feb-09.
Our review covers the period from 08-Apr-25 to 10-Sept-26.
The portfolio delivered a far superior return when compared to its peers but for broadly the same volatility risk.
Holding strategic weights to physical gold and gold related equities, a low duration positioning within bonds (low sensitivity to interest rates), an improved environment for investment trusts that helped to boost their returns after years of facing headwinds, strong returns from equities outside of the US, and at times, a rekindling of investors’ willingness to respond to market fundamentals, all helped.
08-Apr-25 through to 29-Oct-25 Risk on
Stock markets rebound strongly after some of the tariffs imposed upon foreign goods entering the US are either lowered or paused. Stronger than expected earnings reports continue to support stocks – particularly US technology businesses – but the rally then broadens out to buoy other industry sectors and regions as the prospects for recession diminish. In the meantime, the US dollar continues to weaken.
Generally, we wouldn’t expect the portfolio to perform as strongly as it did during this risk-on phase (its strongest performance period since launch – apart from 2009 during the market’s rebound from the great financial crisis), but the combination of factors that had been clear headwinds in the past, now sharply reversed to become significant tailwinds.
Having added to investment trusts on wide discounts earlier, the portfolio began to reap the benefits when these discounts narrowed – in some cases significantly. Several trust holdings were boosted by M&A activity – including Urban Logistics REIT, which was bid for and acquired by LondonMetric Property.
The performance from the narrowing of investment trust discounts has a tendency to be far more impactful than their weighting in the portfolio might suggest – and this period was case in point.
Holding strategic weights of 5% in physical gold and 3.5% in gold related equities on debasement fears (the potential for major currencies like the US dollar to lose their purchasing power) also boosted returns – with Wisdom Tree Core Physical Gold pitching in a healthy return and Konwave Gold Equity almost doubling during the period.
Throughout this phase, the team continued to top sliced returns when performance from holdings strengthened – helping to lock in gains.
29-Oct-25 through to 27-Feb-26 Risk on (Rotation out of big tech)
Investors begin to rotate away from big AI related technology names due to overstretched AI valuations, fading optimism over the prospects for rate cuts, and concerns about AI monetization. Investors begin to believe that AI’s cost burden might sharply exceed earlier assumptions, raising questions about profitability and returns – leading to selling pressure across the AI hardware, semiconductor, and cloud ecosystems.
The selloff then intensifies as worries emerge that new AI agents and automation tools might displace legacy software as a service business models. Instead, investors start to sell ‘America’, rotate from growth into value in favour of other equity regions.
This proved to be another strong period for the portfolio.
In relative terms outperformance from equity regions other than the US helped. The valuation discipline has steered the portfolio away from having meaningful exposure to US equities for as long as we can recall – prompted by the market’s often rich valuations.
This meant having a low exposure to the US dollar, which also weakened relative to sterling. Nonetheless, Smead US Value delivered a double digit return during a period when the broader US equity market turned negative.
Other value funds also chipped in with good returns – likewise dedicated smaller company specialist funds, such as Aberforth Smaller Companies and M&G Smaller Companies.
In the meantime, Wisdom Tree Core Physical Gold and Konwave Gold Equity continued to post very strong returns and were continually trimmed back towards their strategic holding weight.
Exposure to property and infrastructure trusts – a key difference when compared to some peers – also did well, although it wasn’t all plain sailing. Greencoat UK Wind and Foresight Solar Trust both fell on news of the UK government’s proposals to shift the measure used to index the UK renewable energy subsidy each year from RPI to CPI, thereby reducing the strength of expected future returns from their assets.
The team’s concerns about private equity trust’s gearing levels, their persistent discounts, and exposure to software businesses at risk of AI disruption, meant that they were progressively cut back during our review period as a whole – but particularly so during this phase.
27-Feb-26 through to 27-Mar-26 Iran War (Initial Risk-off Reaction…)
The US and Israel launch attacks on Iran sparking retaliatory reactions that affect the whole of the region. Markets then begin to price in the risk of the war escalating and its impact upon the supply of energy from the region to Europe and Asia in particular. The impact upon the price of oil and financial markets then flip flop as the conflict is paused, restarted and paused again.
The focus on assets that offer a ‘margin of safety’ in valuation terms has tended to work well in risk-off market conditions – after all – more lowly valued investments arguably have less far to fall when markets tumble. Not so during this particular phase, though, because the portfolio recorded a deeper drawdown than its peers.
So, why was this?
The previous risk period had seen investors rotate away from US assets, but they returned during this phase when they valued the US dollar for its typical safe haven status. As we mentioned earlier, the portfolio tends to have low exposure here.
Holding physical gold and gold related equities had been very beneficial for the portfolio for some time, but they now detracted heavily.
We note that many peers had already sold their gold exposure, but the team wanted to take the emotion away from its decisions on gold – given that its lack of income makes its margin of safety in valuation terms difficult to quantify. The team maintained its strategic weights of 5% for physical gold and 3.5% for gold related equities, which hurt.
Exposure to commodities might have helped because the oil price in particular went up quite significantly, but the team was to add this exposure later on in our review period and the portfolio missed out during this phase.
In the meantime, investment trusts can sometimes feel the brunt of a sharp fall in markets as investors sell quickly to reinvest into assets they perceive to be safer. Likewise, smaller companies, to which the portfolio tends to have more exposure than its peers.
This hurt, but as we’d expect, the team took the opportunity of wider investment trust discounts to add to holdings like Aberforth Smaller Companies.
The resumption of a stronger US dollar did stem a deeper decline though by helping iShares $ TIPS 0-5 year (US Treasury Inflation Protected Securities), Tufton Assets, and BioPharma Credit to eke out small positive returns.
BH Macro was added during this phase in a bid to help the portfolio better weather bouts of volatility in bond markets.
27-Mar-26 through to 19-Jun-26 Risk on
Investors rotate back towards AI and tech with these sectors powering a strong rally in global equities. A combination of the easing of tensions in the conflict between Iran, Israel, and the US, robust earnings growth, and optimism surrounding the prospects for the tech and AI related sectors amidst significant investment in semiconductors, data infrastructure, and cloud computing, all help.
The same lack of exposure to US equities that had proven unhelpful in the last risk period, continued into this one in terms of their effect.
Whilst in absolute terms returns appeared pleasing, they still fell short of the peer group.
Investment trusts often take some time to fully participate after an inflection towards a more positive market environment, and this was the case here, and it held the portfolio back.
Physical gold and gold related equities continued to struggle, and the portfolio’s emphasis on valuations didn’t help during a period when speculation and momentum drove some AI related segments higher.
More positively, infrastructure, renewable infrastructure, and smaller company exposures all did well.
In the meantime, the team introduced a holding in Neuberger Commodities to help plug the gap in the portfolio’s armoury against inflationary pressures.
To reflect the gold exposure that this entailed, the strategic weight to the physical gold ETF was pared back to 4.5%. Polar Capital Biotechnology was also added.
19-Jun-26 through to 10-Sept-26 (Rotation out of semiconductors / choppy markets)
Profit taking after the share prices of some semiconductor companies had more than doubled in the space of a few months – with the rally having been partly fuelled by excessive leverage and speculative retail investor buying – together with concerns about the economics behind significant AI hyperscalers’ infrastructure spending – led to a significant slump in the price of semiconductor companies’ shares despite their strong earnings growth.
In the meantime, the price of oil rose due to the ongoing conflict in the middle east – increasing the likelihood of higher levels of inflation and leading to rising bond yields, which led to investors questioning the sustainability of already high levels of government debt.
The portfolio resumed its previous pattern of strong relative outperformance by posting a positive return when some of its IA sector peers failed to do so.
This came during a period when some growth stocks struggled as bond yields rose. Leaning towards assets on low valuations helped, as did having a low duration stance with bonds (low sensitivity to interest rates).
The portfolio also tends to do well when investors appreciate and act upon market fundamentals – and this was one of those periods.
Konwave Gold Equity and Wisdom Tree Core Physical Gold both performed well, as did the recently introduced Polar Capital Biotechnology Trust.
Some infrastructure names that had done well despite the rising interest rate environment were trimmed and the proceeds added to iShares 0-5 year Gilt. The latter had been introduced a while earlier to protect against the potential for longer dated bond yields to rise (and their capital values to fall) in a rising interest rate environment.
With the valuations of some assets becoming ever stretched in the team’s view – it added two absolute return vehicles during our review period – lifting this type of exposure from a zero weighting to 7.5% by the end.
This particular phase saw the introduction of the convertible arbitrage fund, Lazard Rathmore Alternative, with the team seeking to take advantage of its potential to outperform a mixture of equities and bonds in poor markets.
Qualitative analysis by Scopic Research www.scopicresearch.co.uk
The opinions expressed are those formed by Scopic Research and don’t represent investment advice or a recommendation to invest in a particular multi-asset portfolio. Scopic Research doesn’t give investment advice. Past performance isn’t a guarantee of the returns that might be achieved in the future and investment returns can be negative as well as positive.
Main image: pie chart, jakub-zerdzicki-9PwLeZA-RGc-unsplash
