Over the last decade UK shares have lagged their global counterparts, in part thanks to the disruption from Brexit, and that is reflected in the performance of the UK All Companies funds sector. A recent shift in the market towards value suggests it could be time for this space to play catch up.

Funds in the category have a pretty broad remit, beyond having 80% of their assets in UK stocks and a primary goal of achieving capital gains.

It is a very large collection of funds but there are two standout performers which would have doubled your money over the last five years.

TAKING ADVANTAGE OF FLEXIBILITY

The two funds in question, MI Chelverton UK Equity Growth (BP855B7) and Slater Recovery (B90KTC7), have put the flexibility they enjoy to good use.

Launched in 2014 by Chelverton Asset Management, a small and mid-cap specialist, the fund is steered by experienced smaller companies investor James Baker. The focus is on growing, cash generative businesses.

First the fund screens for metrics like revenue growth, cash conversion, balance sheet strength and margins to arrive at a universe of stocks from which to choose, with Baker then looking at valuation.

Nearly 20% of the portfolio is in the technology sector and more than 50% of its investments have market valuations of £500 million or less.

Top holdings include construction materials firm Sigmaroc (SRC:AIM) and publishing firm Future (FUTR) and has an ongoing charge of 0.83%.

Slater Recovery is run by the eponymous Mark Slater, son of the late Jim Slater, a famous financier and author of best-selling investment book The Zulu Principle.

He manages the fund based on some of the principles outlined by his father – namely a focus on growth at a reasonable price.

This involves using the price to earnings growth ratio – measuring the level of earnings growth against price to earnings – to identify potential investments.

GROWTH AT A REASONABLE PRICE

Slater Recovery isn’t looking for broken businesses – the name instead refers to the period when it was launched in the early noughties when the wider market was rebounding from a major correction.

It has a lot in common with Slater Growth (B7T0G90), which is running just behind it in the performance stakes over five years, sharing around 80% of the same holdings.

However, Slater Recovery typically skews slightly more to the small cap end of the market. Again Future is a top holding and some much larger firms are also in the portfolio like Tesco (TSCO) and Prudential (PRU). The ongoing cost of the fund is 0.76%.

In relative terms the investment trusts UK All Companies contingent has underperformed with none of this smaller group able to chalk up anything like the performance of the Chelverton and Slater funds.

The best of the bunch is Henderson Opportunities Trust (HOT). Managers James Henderson and Laura Foll look to pursue a diversified approach by dividing the portfolio into seven different ‘buckets’.

A DIVERSIFIED APPROACH

These encompass early-stage firms, small and medium-sized outfits delivering compound growth, fast-growing smaller companies, large companies, special situations, resources and recovery plays.

Top holdings include Scottish housebuilder Springfield Properties (SPR:AIM) as well as banking firms Barclays (BARC), NatWest (NWG) and HSBC (HSBA). The trust has an ongoing charge of 0.88%.

Coming in second to the Henderson trust is Artemis Alpha Trust (ATS). At the helm are Kartik Kumar and John Dodd who look to focus on higher quality companies which enjoy competitive advantages in industries with attractive fundamentals and which have strong management teams. Top holdings include funerals provider Dignity (DTY) and retailer Frasers (FRAS). The ongoing charge is 0.93%.

‹ Previous2022-02-24Next ›