WHEN the banking system crashed in 2008, hedge fund managers were probably lumped together in the public mind with everyone who had failed to see it coming.

But Bournemouth-raised Luke Newman, who runs a multi-billion dollar fund, says there are a lot of misconceptions about what they do.

He has been fascinated by shares since he was a pupil at Bournemouth School, and by the relationship between share prices and psychology. At 38, he co-manages the Henderson UK Absolute Return Fund.

“By investment, it’s one of the largest in the UK. It’s one that’s grown very quickly. I run about seven billion dollars,” he says.

The job is largely about identifying companies that are growing and are likely to generate returns for investors – as well as “hedging” against the down times. He acknowledges the public probably tar his profession with the same brush as investment bankers.

“Some investment banks came out of the events of the last decade with poor reputations and were doing things that were very aggressive, using a lot of leverage and taking a lot of risks,” he says.

“The fund managers, and our fund in particular, were at the opposite end of the risk spectrum, not borrowing money, not taking outlandish levels of risk that you couldn’t control but really meeting companies, meeting policy makers and central banks and using those inputs to not only gain an economic perspective but thinking about the psychological impact on shares.”

A lot of his job is about making sure investors are not badly burned by seismic events such as recessions, elections and referendums.

“It’s possible, in a period like 2008, to make positive returns for investors even when the stock market and bond market are difficult. It’s a very flexible product but it’s one that requires a lot of risk control because you need to legislate for all manner of uncertainty, politically and economically,” he says.

Whereas, 10-15 years ago, funds like these would have been the preserve of very high net worth individuals and big pension funds, he says much of the growth in recent years has been through ordinary investors.

Mr Newman’s parents ran a Bournemouth hotel and he went to Kings Park School before passing for grammar. The hotel was “a great place to learn, with a lot of people coming through the business”.

He became interested in shares following the big privatisations of the Thatcher years.

“At 14, we were given two weeks to write to companies and secure work experience. A lot of my friends were looking to get experience at the Littledown Centre or Bournemouth Hospital. I wrote to all the fund management and stockbroking firms I could find and got a placement with National Mutual Fund Management,” he said.

“I spent two weeks there and loved the experience. From then on I went back every summer until I went to university.”

The other passion that came close was football. He played for Boscombe Albion and Ringwood Town, appearing several times in goal in friendlies against a Cherries side that featured Steve Fletcher, and losing by such margins as 4-0, 5-0 and 7-0.

He read economics and politics at Warwick University and went to work for Deutsche Asset Management. “It didn’t suffer fools and you needed to make a difference at an early age,” he says.

“At 21, it was certainly an environment of early responsibility. I was given a fund to run after two years. I was running £50million as a fund at the age of 24. At the time, I was the youngest fund manager in the City.”

But despite the popular image of City whizz-kids bullying and shouting their way through the day, he says his job requires softer skills and that over-confident investors don’t succeed for long.

“Humility has to be at the heart of an investment strategy,” he says.

“Primarily my duty is to the investors, to avoid losses and provide that investment return, but with a very strong social duty as well.”

The social duty comes from the fact that his decisions provide capital for companies to grow. “Entrepreneurs really should get the capital and the cash to grow their business so that’s a very real responsibility to the economy as well as the investors, to ensure that the best ideas can grow and flourish,” he says.

He is at his desk by 6.30am, reacting to the economic news. “My day is spent monitoring companies really, but I spend as much time meeting with the CEOs and chairmen of the big companies in the UK and around the world,” he says.

“That’s a really valuable opportunity to hear first-hand what the prospects are for individual companies, investors and sectors. There’s a reason why hedge fund managers haven’t all been replaced by computers. Share prices, as we all know, do not move all the time in rational, predictable fashion.”

He leaves the office at 6pm, but since a lot of his fund is invested in the US, he can be trading until 9.30pm from his Hertfordshire home – to the occasional frustration of wife Toni and children Charlie, six, and Elodie, three.

The job requires spotting trends and potential as well as reacting to the daily blizzard of financial news.

“It’s at the heart of the job, balancing the long-term, more structural trends with the day-to-day headlines that we all see,” he says.

“The reality for a hedge fund and absolute return funds is, as much as I’m trying to identify the next Facebook, the next long term winner, you can’t afford to lose money in the short term either. You’ve got that commitment to investors.”

The prevailing wisdom is these days is that the experts failed to predict big shocks. But Mr Newman says he saw “hugely reckless behaviour” by banks in the US before the 2008 crash. He got outside London during the EU referendum campaign and sensed the mood turning against the experts, he says. A holiday in Florida gave him similar doubts about a Hillary Clinton victory.

“2016 has been a great example where you needed, particularly in the financial markets, to have your head in the real world,” he says.

While he manages a lot of other people’s money, he also invests in his own judgement by putting 60 per cent of everything he earns into his own fund.

“I think that’s the right thing to do morally but I think it’s an important message,” he says.