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Majedie: How we went from zero to £200m in seven months
by Robert St George on Sep 13, 2013 at 08:41
The UK Income fund strategy run by Majedie Asset Management has passed the £200 million mark in just seven months.
The strategy now boasts £130 million of assets under management in its pooled UK fund, with a further £80 million in segregated client mandates.
The ‘core competency’ of the strategy, according to its manager Chris Reid (pictured), is backing ‘companies that can leapfrog the competition’.
And that is certainly something his own fund has achieved too: it has been a top-decile performer since its initial seeding in December 2011, with a total return of 54% compared with 36% from the FTSE All Share index and 33% from the Equity Income peer group.
Powering these results has been a core of unfancied stocks, a typical holding being easyJet. Reid is 4.1% overweight in the budget airline, whose share price has more than trebled through the strategy’s life.
EasyJet has ‘reclaimed its industry’, says Reid, by eschewing the ‘ridiculous profit margins’ that deter passengers and instead ‘getting the service right’.
Similarly, Reid saw ITV – where he is 4.2% overweight – as a ‘fallen angel’ that could be turned around by its ‘very strong’ management team. ‘It was always cash generative when it was firing on all cylinders,’ he explained. By embarking on a programme of operational efficiency and studio-led innovation, Reid believes it is back to its best.
ITV's shares have also almost tripled in value since the end of 2011, with a highlight being the announcement of a special dividend earlier this year.
BAE Systems is Reid’s largest position, a 6.4% overweight. He praises it as a rare cheap defensive name, which currently trades on 10 times its forecast 2013 earnings despite having surged by 64% in the strategy’s time. ‘It’s done a good job of transforming itself into an export-led business,’ Reid comments.
Equally notable is how Reid has shunned the staples of the equity-income universe: he is 3.3% underweight in both Vodafone and British American Tobacco, 4.1% light in GlaxoSmithKline, 6.6% in Royal Dutch Shell, and 6.9% in HSBC.
Despite the strategy’s success so far, Reid wants more. ‘We are redoubling our efforts to deliver strong performance in the future,’ he affirms.
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On the road
on Dec 06, 2013 at 14:28