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ISA 2016: three star UK fund managers for your portfolio
Citywire's head of research, Jonathan Miller, highlights three leading managers in the UK All Companies funds sector.
by Jonathan Miller on Mar 15, 2016 at 12:12
Jonathan Miller is head of research at Citywire.
The UK All Companies funds sector is highly competitive with over 230 funds, most of them actively managed, seeking to beat the FTSE All Share index.We’ve been through the numbers and picked three fund managers who have delivered the best performance over three and seven years.
The bubbles on the charts of the following pages show the relative size of the funds run by the managers compared to their rivals. The charts are generated by our Citywire Discovery tool which we use to analyse the performance of funds and fund managers.
Seven-year risk adjusted ranking: 2/99
Three-year risk adjusted ranking: 9/143
Fund currently managed: CF Miton UK Value Opportunities
George Godber joined Miton just under three years ago, but we have stitched together his performance in the sector including his previous stint at Matterley to generate his longer-term track record. Over seven years he has returned 258.5%, more than doubling the 105.2% gain in the FTSE All Share index.
Godber’s strong outperformance has been recognised by investors, with the CF Miton UK Value Opportunities fund’s assets now standing at £725 million.
A positive view on the domestic UK economy, expressed through small and mid cap exposure, has been a key driver of returns. Examples are housing stocks Bellway (BWY) and Barratt Developments (BDEV), the top two holdings, and also in the consumer discretionary space through WH Smith (SMWH) and JD Sports (JD).
As a stockpicker, Godber and co-manager Georgina Hamilton, focus on assets and liabilities in company balance sheets to ensure there is a significant margin of safety in their analysis. This is backed up by scrutinising cash flow statements as they aim to find companies whose embedded value is yet to be reflected in the share price.
Seven-year risk adjusted ranking: 1/99
Three-year risk adjusted ranking: 11/143
Fund currently managed: CF Lindsell Train UK Equity
The approach of Nick Train has been to build a concentrated portfolio of world leading brands, consumer stocks with a rich heritage and companies with a technological edge. His holdings are deemed to be ‘exceptional’ businesses with reliable earnings and strong franchises.
There is very low turnover in the £1.8 billion fund and his purchase of Rémy Cointreau last summer was the first new addition in over four years. The French-listed spirits company forms part of his 18% exposure to overseas companies. The largest individual holding here is Dutch brewing giant Heineken, at 7% of the portfolio.
In 2015, of the 23 holdings in the fund, 15 rose by at least 10% and four companies lost 10% or more. These were Pearson (PSON), Burberry Group (BRBY), Fidessa (FDSA) and Daily Mail (DMGOa). Train retains a high conviction in these names he topped up on Pearson shares amid its 36% fall.
Over seven years he has returned 256.5% compared with 105.2% for the index.
Seven-year risk adjusted ranking: 6/99
3 year risk adjusted ranking: 15/143
Fund currently managed: MFM Slater Growth
The performance of Mark Slater in the sector is based on a composite of the two funds he runs, which have returned 256.7% over seven years.
The MFM Slater Growth is the larger of the two, containing £330 million of assets.
His investment strategy hones in on businesses he believes can deliver sizable earnings growth while having low debt and robust cash flows. The companies fitting this criteria tend to be medium-sized and small companies outside the FTSE 100. The largest market segments to which the portfolio is exposed are the Alternative Investment Market (37%), followed by ‘mid caps’ in the FTSE 250 (23%).
Slater’s top holding at 7.4% of the fund, is Hutchison China MediTech (HCM) which has risen twelvefold since its purchase in 2010. The company has property assets which are being sold, an R&D operation which Slater sees as extremely valuable and he also believes the intention to obtain a dual listing on Nasdaq, the US technology stock exchange, will be a further boost to its valuation.
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