Man GLG Undervalued Assets Fund Professional Accumulation Shares (Class C)
Rated Fund 2018-20. Uses disciplined process to identify recovery opportunities
Although this fund has been experiencing some short-term weakness it has comfortably beaten its FTSE All-Share benchmark since its inception in 2013. Henry Dixon and Jack Barrat, the fund's managers since then, seek opportunities that are being ignored or have fallen out of favour with investors, thereby leading to potential recovery opportunities. Dixon manages an income version of the fund; but because this fund does not need to generate a yield requirement, he can invest further down the market capitalisation scale and had more than one quarter of assets in small companies at the end of 2019. The fund nevertheless yields a very respectable 3.1%.
The managers believe they can add value through thorough analysis of company balance sheets to understand a company's true assets and liabilities. They aim to identify two types of stocks: those trading below their estimate of the company's asset value and those where the company's profit stream is being undervalued relative to the cost of capital. The fund can also include exposure to shares listed in Europe and corporate bonds, up to a collective maximum of 20%, and at the end of 2019 had 7.6% and 0.1% invested in these areas and almost 9% in cash.
Morningstar rates the managers' pedigree. While this fund has a relatively short history, its conviction has been built over a longer timeframe through Dixon's previous mandate as manager of Matterley Undervalued Assets, which he managed from launch in 2008 using the same investment approach. Barrat had assisted Dixon at Matterley, so their association predates this fund. "A disciplined investment process and strong execution by the managers make this strategy a compelling choice," says Morningstar analyst Samuel Meakin.
Investment generally involves at least a five-year horizon, and they sell a holding only when one of three things occur: they feel their original investment case was mistaken; the market has caught up with their assessment of the stock; or they find a new idea. The trust has a strong tech focus, but risk is spread through diversification - having 75 to 125 holdings and exposure to a minimum of six countries and 15 industries. Smaller companies typically exhibit a higher degree of risk than larger ones, but Morningstar analyst David Holder believes "risk has been used to good effect, as evidenced by the Sharpe ratio [a measure of return in relation to risk] when compared with peers and the index". Shares in the trust tend to trade around the value of underlying assets.
Narrative and ratings content all as of January 2020.See all Money Observer rated funds
|British American Tobacco PLC||5.45 %|
|GlaxoSmithKline PLC||4.33 %|
|Redrow PLC||3.15 %|
|QinetiQ Group PLC||3.15 %|
|Lancashire Holdings Ltd||3.10 %|
|Rio Tinto PLC||2.86 %|
|Beazley PLC||2.67 %|
|Anglo American PLC||2.58 %|
|Ryanair Holdings PLC||2.34 %|
|easyJet PLC||2.27 %|
|United Kingdom||86.34 %|
|Financial Services||23.31 %|
|Consumer Cyclical||14.18 %|
|Basic materials||12.69 %|
|Consumer Defensive||12.12 %|
|Real Estate||5.26 %|
Jack Barrat is a portfolio manager at Man GLG. He joined Man GLG in October 2013 from Matterley. Before that, he worked at UBS for four years. Jack holds a First Class degree in Politics and History from Cambridge University. He is also a CFA charterholder.
Henry Dixon is a Portfolio Manager on the UK Equities team at Man GLG, having joined in October 2013. Prior to joining Man GLG, Henry was a Portfolio Manager and Founder of Matterley where he ran their flagship fund of the same strategy. Prior to that he worked at New Star, and The Family Charities Ethical Trust.
Data provided by Morningstar.
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