Central to Mark Slater's investment strategy is a focus on companies he believes are poised to deliver impressive earnings growth, and which he can purchase at a reasonable price. These are typically profitable stocks with robust cash flows and low debt.
We recently met the manager for an update on his MFM Slater Growth Fund. Since we last met him in 2014, his investment approach has been met with great success. Over one year the fund has delivered a return of 18.5% against 9.2% for the IA UK All Companies sector, although please remember past performance is not a guide to future returns.
|Annual percentage growth|
| June 10 -
| June 11 -
| June 12 -
| June 13 -
| June 14 -
|MFM Slater Growth Fund||56.08%||-5.06%||15.01%||33.08%||18.05%|
|IA UK All Companies||23.06%||-10.00%||32.05%||11.08%||9.02%|
Please remember past performance is not a guide to future returns. Source: Lipper IM* to 01/06/15
A position in Hutchison China Meditech, a pharmaceutical group based in China, has played a key role in the fund's outperformance. Over the period the stock has risen by an outstanding 132.3% and as it currently comprises around 7% of the total portfolio, it has significantly boosted the fund's overall returns. Mark Slater is maintaining this position as he anticipates further growth.
Elsewhere, a holding in Entertainment One, the international entertainment and content distribution business, has also performed well. It has been held in the portfolio since September 2010 and following its success the previous smaller company was promoted to the FTSE 250 (UK-listed medium-sized companies) in 2013. As Mark Slater no longer views the stock as attractively-valued as it once was, he has gradually reduced the position size from 8% to a current weighting of 1%.
Our view on this fund
We view Mark Slater as a true stock picker, spending little time on wider economic issues when constructing the fund. Over the longer term, our analysis suggests he has added value through good stock selection. He demonstrates real conviction by building significant weightings in some positions. As a concentrated portfolio, each position can have a meaningful impact on performance, but this is a higher-risk approach.
Combining investment in small and medium-sized companies with such a concentrated approach makes the fund a relatively high-risk proposition, and means the fund does go through prolonged periods of underperformance. In addition, we believe we already have a strong line-up of managers focused on small and medium-sized UK companies on our Wealth 150. As a result the fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.