FTF Martin Currie UK Mid Cap: July 2025 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 companies investor and benefits from the support of a well-resourced team

• The fund had a disappointing last year, lagging behind the FTSE 250 ex IT index

• 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 Martin Currie UK Mid Cap fund aims to deliver income and capital growth over the longer term. The managers invest 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. It’s home to some great domestic companies and also those that do business internationally.

This fund could be a useful option as part of the UK portion of an adventurous investment portfolio or work well alongside funds investing in large or higher-risk smaller UK businesses to achieve broader UK stock market exposure.

Manager

Richard Bullas has co-managed the FTF Martin Currie UK Mid Cap fund since 2013 and took over as lead manager in July 2020. He began his career in accountancy audit before moving to Aviva as an analyst. He joined Rensburg Fund Management, which later became Franklin Templeton Fund Management, 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.

We believe the fund is in good hands under Bullas and our conviction lies in him. He has a strong track record investing in smaller companies, and we believe investing in medium-sized companies is a natural and achievable extension of his abilities.

Meet the manager: Richard Bullas

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, such as those with brand power and hard-to-replicate advantages. Management teams are essential to a company’s success so they must have a strong track record of delivery and be incentivised appropriately. These companies also need to be 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. While 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 30-50 companies. There are currently 36 companies in the fund. This means each one has the potential to make a meaningful difference to performance, both positively and negatively, which can increase risk.

In recent months, the manager’s approach to portfolio construction has evolved following a period of underperformance. A number of new investments, which are less correlated to existing ones, were added to the fund to broaden the portfolio and improve diversification. We view it positively the manager has taken time to reflect on a more difficult period and we’ll monitor progress from here.

New investments include financials platform IntegraFin, food manufacturer Premier foods, infrastructure products and services provider Hill & Smith and financial solutions provider Alpha Group.

Culture

Bullas and the team are based in Leeds. They have a collegiate culture, with lots of collaboration and support for each other. The team is part of Martin Currie, an asset manager within the wider Franklin Templeton group, so they enjoy the resources that come with being part of a large organisation. The Leeds office operates like a boutique fund group though, as the managers are given the freedom to invest largely without interference.

ESG Integration

Franklin Templeton was previously a laggard on ESG integration. But since its integration with Martin Currie (as part of the broader Legg Mason acquisition), the group has made significant strides forward, in part because of its ability to leverage Martin Currie’s expertise. Responsibility for carrying out ESG analysis sits with individual analysts and portfolio managers, and all stock research must consider the material and relevant governance, social and environmental factors that could impact a company’s ability to generate sustainable returns.

The firm offers a range of strategies 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 management groups, 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 executives and board members of the organisations they invest in to review issues they believe are material to the firm’s long-term prospects, supported by the firm’s ESG team. They also vote at shareholder meetings wherever possible, informed by three third-party voting advisors. 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. This fund is not managed to a sustainable mandate.

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 HL account charge of up to 0.45% 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 2025, the fund’s delivered returns of 88.59%*, compared with 95.74% for the FTSE 250 ex Investment Trust index. Past performance isn't a guide to the future.

The last year has been a particularly tough one for the fund, which is what’s impacted the longer-term performance record. Prior to the last year, the fund had performed well since its launch and had delivered returns ahead of its benchmark.

Over the last 12 months the fund delivered a return of 0.26%, behind the 11.59% return from the FTSE 250 ex IT index.

The fund’s style is to invest in quality companies that aim to grow their earnings year after year, but these companies have struggled compared to more value focused sectors, providing a headwind to performance.

Through 2024, the fund also had significant exposure to businesses sensitive to economic conditions. Following initial optimism about political stability with a new government in place, growing concerns around consumer confidence and the economy culminating in the autumn budget meant cyclical businesses suffered. Some saw profits hit, and their shares fall in value as a result.

The fund also didn’t invest in a number of businesses that make up a large part of the index, and that were taken over during the year, which benefited their share prices. This included the likes of investment platform Hargreaves Lansdown, soft drink producer Britvic and insurer Direct Line and was a headwind to performance. 2024 saw an unusually high number of takeovers across the FTSE 250 index.

The manager didn’t invest in lots of these companies. Though the reason differs by company, in general lots of the companies taken over were not viewed as being of high enough quality to make it into the fund by Bullas. Bullas prefers to invest in companies he thinks have the ability to grow their earnings consistently year after year.

Though this has been a disappointing period of performance, we think the manager has stuck to his process and made sensible portfolio construction evolutions. We think Bullas has the experience and resource to deliver good long-term returns to patient investors, although there are no guarantees.