- The managers are looking for undervalued businesses in an unloved stock market
- They currently think food retailers are especially good value
- The fund continues to feature on the Wealth 150 of our favourite funds
The UK is home to many world-leading businesses with outstanding prospects. But Brexit continues to dominate headlines. As a result we think the share prices of many UK companies don’t reflect their growth potential. This makes for a fertile hunting ground for UK stock-pickers, including the managers of the Majedie UK Equity Fund.
Each of the fund’s four managers has their own style. We think the combination of the four works well together. It means investors benefit from a steady flow of new ideas, which keep the fund diversified.
The managers look for strong businesses that have been overlooked by other investors, and can therefore be picked up cheaply. We think an experienced management team looking for cheap companies in an unloved stock market is an attractive opportunity.
This fund stands out from others in the sector. The managers are prepared to invest against the herd, and often choose higher-risk small and medium-sized companies.
Where have the managers invested?
Domestically focused UK companies have been out of favour since the Brexit vote. But in many cases they’ve been able to grow their earnings strongly. A good example is food retailers, with Tesco and Morrison among the fund’s largest investments.
Company in focus - ITV
Broadcaster ITV ticks all of the managers’ boxes and was recently added to the fund. The company’s share price suffered as investors raised questions over the outlook for TV advertising, one of ITV’s main sources of income.
The managers see plenty of positives. Big consumer goods companies could increase their advertising spending to support their brands. ITV also benefits from an experienced new CEO who’s reviewing the company’s strategy. The managers think this could boost its long term value.
In recent years investors have favoured established, high-quality companies with a strong track record of growth. The fund has few investments in this type of company, which held back recent performance.
|Annual percentage growth|
|Apr 2013 -
|Apr 2014 -
|Apr 2015 -
|Apr 2016 -
|Apr 2017 -
|Majedie UK Equity||19.9%||6.6%||-4.9%||20.7%||6.5%|
Past performance is not a guide to the future. Source: *Lipper IM to 30/04/2018.
But the long-term track record is impressive. An investment of £10,000 made 10 years ago would now be worth £25,037*, while the UK stock market would have returned £19,089*. We put this down to the managers’ ability to select companies with bright futures ahead of them, although past performance should not be seen as a guide to future returns.