FTF ClearBridge UK Mid Cap: July 2026 fund update

• The fund invests in medium-sized companies, often considered the ‘sweet spot’ between company growth potential and maturity

• Richard Bullas is an experienced UK small and medium-sized company investor and benefits from the support of a well-resourced team

• The fund underperformed the FTSE 250 ex Investment Trusts index over the past year

• The fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The FTF ClearBridge UK Mid Cap fund, formerly named the FTF Martin Currie UK Mid Cap fund, aims to deliver income and capital growth over the longer term. The manager invests in medium-sized companies within the FTSE 250, which is made up of mid-sized companies that are often considered the ‘sweet spot’ between company growth potential and maturity. Although it has more companies that carry out most of their business domestically in the UK than those in the FTSE 100, it still includes a good number of businesses that operate internationally.

This fund could be a useful option as part of the UK portion of an adventurous investment portfolio or to achieve broader UK stock market exposure.

Manager

Richard Bullas has co-managed the fund since 2013 and took over as lead manager in July 2020. He began his career as an auditor before moving to Aviva as an analyst. He joined Rensburg Fund Management, which later became part of Franklin Templeton’s ClearBridge business, in 2000. Bullas became a fund manager in 2006 and has covered the UK small and medium-sized companies’ sector for most of that time.

Bullas is supported by the broader small and mid-cap team comprised of Marcus Tregoning, Courtney Westcarr and Dan Green. Collectively they have a lot of experience and work together collegiately.

Over the longer term Bullas has a strong track record investing in smaller companies, and we believe that investing in medium-sized companies is a natural and achievable extension of his abilities.

Process

Bullas and his team hunt for businesses with strong growth potential. Their process centres around two key pillars – quality and valuation. This sets a high bar for companies to make it into the fund and aims to mitigate three key risks: business, financial and management.

In terms of quality, the team looks for companies whose earnings are sustainable over the long run, thanks to things like brand power or hard-to-replicate distribution networks. Management teams are essential to a company’s success, so they must have a strong track record of delivery and be incentivised appropriately. The managers also seek companies that are financially robust, so they look for companies that are highly cash generative and avoid those with lots of debt.

Once the team has evaluated a company’s quality, they assess how attractively its shares are valued. As long-term investors, they want to understand the share’s upside and downside potential. The team typically forecasts the potential share price returns over the next three to five years. If the share price is attractive enough to benefit from these returns, they’ll invest. Companies are sold if they graduate into the larger FTSE 100 by growing in value. Although the fund mostly invests in medium-sized companies, Bullas can also invest in smaller companies, which adds risk.

This fund is relatively concentrated, typically featuring between 30 and 50 companies. There are currently 38 companies in the fund. This means that each one has the potential to make a meaningful difference to performance, both positively and negatively, which can increase risk.

The manager has evolved their approach to portfolio construction following a period of underperformance in 2024. Although still concentrated, the number of portfolio holdings has increased, from around 30 in 2024. That has included adding new investments which are less correlated to existing ones. This is intended to broaden the portfolio and improve diversification, thereby reducing exposure to stock or industry specific risks.

In the last six months, the manager sold investments in more economically sensitive, or cyclical, businesses, including retailer Pets at Home, automotive distributor Inchcape, and recruiter PageGroup. Additions have been made with the aim of increasing diversification and include industrial products distributor RS Group, software sales company Softcat and travel platform Trainline.

Culture

Bullas and the team are based in Leeds. They have a collegiate culture, with lots of collaboration and support for one another. The team is part of ClearBridge, an asset manager within the wider Franklin Templeton group, so they enjoy the resources that come with being part of a large organisation including enhanced input from the central risk management function. The Leeds office operates like a boutique fund group, though, as the managers are given the freedom to invest largely without interference.

ESG Integration

Responsibility for carrying out ESG analysis sits with individual analysts and fund managers. The UK Mid Cap team includes financially material and relevant governance, social and environmental factors as part of their assessment of the overall risk of an investment, given their potential to impact a company’s valuation and ability to generate sustainable returns.

The firm offers a range of other funds that take a more hands-on approach to thematic investing and impact. All investment teams have access to a dedicated Stewardship & Sustainability Council, which brings together leaders in stewardship and sustainable investing from across Franklin Templeton’s investment teams, covering every asset class and strategy range. The Council shares best practice and thought leadership with the wider business. There is a firm-wide commitment to avoid controversial weapons.

Franklin Templeton fund managers and analysts engage with the companies they invest in to review issues they believe are material to the firms’ long-term prospects. They also vote at shareholder meetings wherever possible. The firm publishes regular ESG-focused articles and an annual stewardship report. It also outlines its voting activity on a fund-by-fund basis, although voting rationale is not available.

Cost

The fund usually has an annual ongoing charge of 0.82%, but with a 0.20% saving it’s available to HL clients for 0.62%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside an ISA or SIPP. The HL account charge of up to 0.35% per year also applies, except in the HL Junior ISA, where no account charge applies.

Performance

Since Bullas became co-manager in September 2013, the fund hasn’t quite kept up with its benchmark. From then until the end of June 2026, the fund’s delivered returns of 94.0%*, compared with 112.6% for the FTSE 250 ex Investment Trust index. Past performance isn't a guide to the future.

Although the fund initially outperformed the index over several years under Bullas’ management, the past few years have been tougher for the fund. The fund has underperformed for each of the last three years, which has affected the longer-term performance record. Over the last 5 years, the fund delivered a return of -1.3%, behind the 18.3% return from the FTSE 250 ex IT index.

The fund experienced a period of particularly poor performance in late 2024, lagging its benchmark by 11.3% between June 2024 and June 2025. That reflected the fund’s investments in more cyclical companies, which were hit by the autumn budget that year. Underperformance has moderated more recently, though the fund still returned 1.5% in the 12 months to June 2026, versus 6.6% for the index.

The fund’s focus on quality companies that aim to grow their earnings year-after-year has been a headwind in recent times. These companies have struggled compared to more value-focused sectors.

There have also been some stock picking issues, with companies in the Industrials, Consumer Cyclicals and Real Estate sectors struggling. That includes housebuilder Bellway, whose shares fell after worries about higher interest rates dented sales momentum, while shares in retailer Dunelm fell after intense competition over the Christmas period, leading to a downgrade in profit forecasts.

Though this has been a disappointing period of performance, the manager is seeking to address that through amendments to their portfolio construction process. We think that Bullas remains a good manager for investing in UK medium-sized companies over the long term, although there are no guarantees.