When it comes to fund management, experience can be key – especially when it comes to investing throughout a market cycle. However, the number of funds that have been run successfully by the same manager for a decade or more are few and far between because, as in all work places, fund managers move between jobs and companies.
We take a look at some veterans of UK equity fund management and highlight some of the lesser-known names we believe are the unsung heroes of the future. All of these funds can be found on the Chelsea Selection.
Having joined F&C in September 2007, Thomas Wilson has been a co-manager of this fund since January 2009 but took over as lead manager as recently as January 2015. Since then, the fund has returned 32.2% compared with the sector average of 18.93%*.
Thomas focuses first and foremost on limiting capital loss and has a good, sensible process, based on understanding and investing in simple businesses at reasonable valuations. He uses screening tools as part of his process to identify businesses which are able to make good returns throughout the economic cycle and to screen out stocks with high levels of debt. He will then analyse the businesses looking for strong competitive advantages.
He believes that such companies can continue to generate profits irrespective of the economic backdrop and this should help them stand the test of time. His high conviction results in a portfolio of around 30 medium-sized UK companies.
James Baker has over 30 years of equity market experience on both buy and sell sides, specialising for all of his career in UK small and mid caps stock selection. However, he has only recently become a fund manager. He was assistant manager of Rathbone UK Recovery fund before he joined Chelverton to run this fund from launch in 2014.
It has been the top performing UK All Companies fund since its launch, up 113.77% compared with the sector average of 37.48**. James largely ignores big companies preferring to focus on mid and small caps. He has a number of criteria he looks for in the companies in which he invests, including faster growth than the market, high gross margins and predictability of sales. Valuation is also an important part of his process.
Jack spent four years in the sales team at UBS before joining Matterly in 2013. He is now deputy manager of Man GLG UK Income and co-manager of Man GLG Undervalued Assets.
While his track record of managing money spans less than five years, Jack has worked closely with current co-manager and veteran Henry Dixon for a while and is well-versed in his value approach to stock selection. Since becoming co-manager of the Undervalued Assets fund, it has returned 51.25% compared with the sector average of 30.85%***.
At the opposite end of the spectrum, Anthony Cross has managed this fund since its launch in 2005, with Julian Fosh joining as co-manager in 2008. Anthony has honed his investment process over a number of years and, in 1997, he published the Cross Report, which forms the blueprint of the fund's investment strategy. Since launch, the fund has returned 378.49% compared with the sector average of 127.75%****.
It is a 'best ideas' portfolio that can invest in any UK company, regardless of size or sector, but it typically has a small and mid-cap bias. Anthony looks for firms with 'intellectual capital'; strong distribution networks, recurring revenue streams and products with no obvious substitutes. He also prefers direct ownership of the company's equity by key employees, as he believes this gives them the motivation to make the business a success. The resulting portfolio consists of businesses that can grow their earnings independently of the wider economy.
Giles started his investment career as an analyst in 1969. He later went on to found Hargreave Hale – the small-cap and VCT specialist firm – in 1986. Giles is an astute and pragmatic stock picker and has surrounded himself with a well-resourced team of skilful fund managers and analysts. The team use their views on the wider economy to filter out large numbers of stocks and sectors, before undertaking thorough company meetings and analysis. Relatively small positions are taken initially and Giles will then run his winners aggressively, adding to them as their story unfolds.
He has managed Marlborough Special Situations fund for more than 20 years now and his investment process has held up well across a wide range of market conditions. As a result, the fund boasts the best 20-year track record of all IA UK Smaller Companies funds, having returned 3,000.45% over this time frame compared with the sector average of 525.58%*****.
Nick Train spent the first 17 years of his career at GT Management having joined the company in 1981. In 1998 he joined M&G where he stayed for two years before leaving to co-found Lindsell Train Limited at the start of the millennium.
He is one of the UK's most renowned fund managers and has been running this fund since its launch in 2006. Nick is known for his concentrated buy and hold strategy – indeed, he has owned some companies for almost the entire period in his portfolios. He ignores most stocks in the market, only looking to invest in a very select group of the highest quality companies for the long-term.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Sam's views are her own and do not constitute financial advice.
*Source: FE Analytics, total returns in sterling, 30 April 2015 to 17 April 2018
**Source: FE Analytics, total returns in sterling, 20 October 2014 to 17 April 2018
***Source: FE Analytics, total returns in sterling, 1 October 2014 to 17 April 2018
****Source: FE Analytics, total returns in sterling, 10 November 2005 to 17 April 2018
*****Source: FE Analytics, total returns in sterling, 1 July 1998 to 17 April 2018
******Source: FE Analytics, total returns in sterling, 10 July 2006 to 17 April 2018