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Top UK stockpickers: Legget leads the way as Dobell declines
by Jonathan Miller on Feb 17, 2014 at 15:22
Citywire has captured its fund research in a new tool, Citywire Discovery. This week we've used Discovery to focus on the UK All Companies sector, where one manager stands out, and it’s not the one with the biggest fund.
In an average week, our research team handles 40 changes in fund manager responsibilities. This is usually the result of managers moving from one group to another or taking on new funds.
Citywire has been conducting this fund manager research for over 10 years. We track more than 9,000 managers globally and our findings have already had a big impact on the way professional investors assess the people running their money.
Our new in-house system, Citywire Discovery, will present all this information in a new light, allowing our readers to explore more deeply the world of fund manager performance and fund manager moves.
Each week some snippets from Citywire Discovery will be presented on the New Model Adviser website. It might be the expertise a group has in a particular sector, the collective or individual performance of its managers, or the managers’ experience and tenure. Beneath these highlights there is a wealth of data about the people managing your clients’ assets.
It has been many years in the making but this analysis will now drive the fund manager coverage we provide in this magazine and on the website.
Jonathan Miller, head of investment research, Citywire.
UK All Companies
We begin by focussing on the UK All Companies sector, one of the most significant and popular sectors for advisers.
The top performer over five years by some distance is Citywire AA-rated Ed Legget, who runs Standard Life Investments UK Equity Unconstrained fund.
One of the most punchy UK equity managers, Legget (pictured) has an excellent long-term track record but is not for the risk averse. His fund has risen and fallen more emphatically than the benchmark. This was evident in the swing from bad to good in 2011-12.
The fund currently holds 50 stocks, and is unrestricted in index weight or size. Legget holds over half of the fund in medium-sized companies with a bias towards sectors like industrials, which will benefit from a pick-up in global growth.
Dobell’s star loses its shine
The largest fund in the sector by size is Tom Dobell’s M&G Recovery, with 9.4% market share. Yet although continuing to dominate in terms of market share, he has slipped to 114th out of 138 managers we track, based on his five-year performance. M&G Recovery has returned 91.9% over the past five years.
Hurt by changes in investor appetite
‘The fund has been hurt by investor appetite moving away from riskier stocks to safer ones,’ an M&G spokeswoman said. ‘Tom is absolutely committed to making this fund work. There are no plans to change the fund’s approach.’
The graph above, taken from Citywire Discovery, shows the situation until the end of December 2012. Dobell is shown far own to the right, representing his large market share.
But things have changed as the next graph shows...
Below average performance
Fast forward to the end of last year and Dobell's fund isn't doing nearly as well.
Diane Weitz, director of Cheltenham-based Ashlea Financial Planning
The performance of M&G Recovery has been poor for the past three years. It has spent several time periods near the bottom of its sector.
But many have kept faith in the investment process of the long-term manager, Tom Dobell.
He is known for researching well the companies in which he invests and for having a long holding period. His fund is out of favour at the moment but is still probably a long-term hold.
Peter Lowman, chief investment officer at London-based Investment Quorum
The M&G Recovery fund has had a difficult few years, not helped by its large sector positions in oil and gas, and basic materials, which have performed poorly throughout 2012 and 2013, and its underweight in financials, which has been one of the best-performing UK sectors.
While we believe Tom’s strategy will deliver over longer time frames, it is difficult to see the fund turn its performance around in the short term and especially in the current environment.