Investors seeking to position portfolios for a re-rating of UK small and mid cap companies and a return to favour for the quality growth style should buy the CFP SDL Free Spirit (BYYQC27) fund. Admittedly, the sister vehicle to Sanford DeLand’s bigger CFP SDL Buffettology (BF0LDZ3) fund lags the IA UK All Companies sector over one and three years. However, the high-quality names in this concentrated portfolio continue to put up robust operating numbers and Shares believes CFP SDL Free Spirit is due a return to form with a tailwind from imminent interest rate cuts.
Alongside Sanford DeLand colleague Keith Ashworth-Lord, CFP SDL Free Spirit’s lead manager Eric Burns pursues ‘Business Perspective Investing’, an unconstrained, quality-focused approach championed by Warren Buffett and the late, great Charlie Munger.
Ranked first quartile over five years, CFP SDL Free Spirit seeks to maximise long-term total returns by investing in UK-listed shares with an emphasis on small and mid caps. Burns aims to buy high-quality businesses and hold them for the very long term. He runs a concentrated book of 25 names and like Buffett, keeps portfolio turnover low.
Adorned with a five-star rating from Morningstar, the £66.9 million fund has returned a culmulative 60.7% since launch, ahead of the IA UK All Companies sector’s 36% haul. CFP SDL Free Spirit is also ahead over five years with a 32.1% return versus 23.3% from the sector.
Sentiment towards the UK remains poor, but we believe CFP SDL Free Spirit’s carefully-constructed book of cash-generative, profitable companies with strong returns on equity and robust balance sheets can reward the patient investor.
That portfolio includes the likes of Harry Potter-to-Sarah J. Maas publisher Bloomsbury (BMY) and value-added distributor Diploma (DPLM), as well as Fevertree Drinks (FEVR:AIM), the premium mixers supplier with ‘oodles to go for’ in the US according to Burns.
Other holdings span Michelmersh Brick (MBH:AIM), a differentiated clay brick maker with pricing power, as well as two relatively recent additions. Auction Technology (ATG) is a scalable platform business with eight online marketplaces serving auctioneers in a fragmented market, while Wilmington (WIL) is a data, information, education and training services provider firmly focused on opportunities within the large global governance, risk and compliance (GRC) market. Ongoing charges are 1.12%.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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