This publication recently interviewed James Johnsen, director, at Church House, and Jeroen Bos, investment director, at their London offices near Piccadilly; the firm’s main office is Yeovil, Somerset. The firm has had a London office since 2004, enabling the asset manager to broaden its client reach beyond those who used to come via the old law firm practice.

“A core focus for us is risk management,” Johnsen said, explaining – and this is a point made to this publication by other wealth firms – that risk means permanent loss of capital, not volatility per se.

“In 1999 we set up a disciplined risk profiling system which was quite new at the time,” he said. On a scale of one to ten, where 1 is very cautious and in cash, and 10 is highly speculative, most clients are bunched around the 2-7 risk range, he said.

In investment terms, there is a “strong value bias” in how the asset manager chooses investments, he said.

This leads point was picked up by Bos, who, as manager of the Deep Value fund, focused in particular on its conservative approach in seeking assets that can be bought at a discount. He has managed the Church House Deep Value fund since December 2003 and his London markets experience dates back to 1984. He’s lived through a fair number of recessions and booms not to be beguiled by market gyrations, he said. The way he runs this fund says a lot about the generally careful approach that the firm takes towards investments, he said.

In choosing a potential investment, Bos said he will look at an undervalued stock and look for catalysts for change; it avoids firms with debt. The firm has to have been around for some time with a track record of some time.

“We are not momentum investors and don’t take country bets. We also don’t use derivatives to enhance returns but do use them if necessary to protect capital,” he continued.

The DVI fund has around 20 investments – a highly concentrated portfolio and unlikely, according to Church House’s marketing literature, to exceed 30 holdings. Bos likes firms where net current assets are worth more than the share price per share. The key figure to watch, he said, is the “net  net working capital” figure, which is arrived at by taking net current assets and subtracting the current liabilities and long-term debt. (The fund has an annual management charge of 1.25 per cent of assets; there is no performance haircut.)

Speciality

For such a relatively modest business, a capability in fixed income is quite unusual, Johnson said, and appeals to clients who want this service. The CH Investment Grade Total Return fund has delivered a one-year performance of 7.2 per cent, ahead of the ML AA Corp 7-10yr Total Return Index, at 3.7 per cent.

The firm covers equities, bonds and cash. It does not, however, invest directly in property. If a client wants property exposure the firm will use a listed vehicle. The same approach applies to areas such as private equity and hedge funds. Clients attach high importance to transparency of their investments and liquidity.

Most clients are based in the UK although there are a few non-UK clients, Johnsen added.

Church House Investment Management might not be the biggest name on the street, but consistent performance will win it a wider audience. This publication will certainly keep an eye out for it in future.