Richard Plackett, manager of the BlackRock UK Special Situations Fund, has long been one of our favourite managers in the UK growth arena. He started to increase exposure to smaller companies in early 2009 believing them better placed to perform well during the early stages of an economic recovery and this has served the fund well.He is now extremely bullish about his portfolio and has high hopes for 2010 and beyond.
The stock market rally last year was driven by companies like the banks that had fallen the hardest during the financial crisis. Richard Plackett prefers to focus on well financed businesses, sacrificing short-term gains for companies with superior long-term growth prospects. He is not the type of manager to chase short-term returns and this is a discipline we admire and is reflected in the fund’s long-term performance.
Richard Plackett looks for companies with a proven track record of growth which can be sustained over the long term, as well as businesses that are cash generative and in a strong financial position. With this in mind he is finding opportunities in the technology and resources sectors for example, where many companies are well placed to adapt quickly to changing circumstances. Essentially, he likes businesses with world leading products in a niche area of the market which are unlikely to be replicated by larger rivals.
As global growth is likely to be driven by emerging markets around 70% of the fund is invested in businesses that are based in the UK, but which sell products aboard in fast growing markets such as China and South America.
The fund has the flexibility to invest across the whole of the UK stock market and around is 75% currently invested in small and medium-sized companies, where Richard Plackett is finding excellent opportunities, although this is a higher risk strategy. The remainder of the fund is invested in larger companies which meet the same stringent characteristics for quality and growth, but are also market leaders in their field. BP, for example, ticks all the boxes; serving over 13 million customers each day in over 100 countries worldwide.
Richard Plackett is assisted by a first-class team at BlackRock and they believe the current UK economic and stock market environment really allows them to play to their core strengths. Furthermore, the fund is also taking advantage of the opportunities in the faster growing markets abroad and this should drive returns regardless of the state of the UK economy. This fund is on the Wealth 150 list of our favourite funds in each sector and we believe it is worthy of consideration for investors seeking a more aggressive UK growth fund.
