River and Mercantile UK Recovery Fund B Inc
Rated Fund 2018-19. Buys shares at firesale prices
Hugh Sergeant, manager of R&M UK Recovery since its launch in 2008, has an impressive track record over around three decades of investing.
Renamed from R&M UK Equity Long Term Recovery during 2018 to align it with River & Mercantile Asset Management’s other offerings, the fund invests in recovery stocks: good businesses currently experiencing below normal profit levels, which are depressing their valuations.
To warrant inclusion in the portfolio a company must have the capability to help itself out of this predicament.
Sergeant will add holdings to the fund at firesale prices in volatile times. This increases the possibility of long-term capital gains, as well as a performance profile that deviates significantly from the benchmark FTSE All-Share index.
Head of UK equities at River & Mercantile, Sergeant believes it is crucial to meet company management first to ensure they are the right people to set their company on the path to recovery.
The investment team has developed an individual philosophy and process called PVT (potential, value and timing). It is this quantitative process that underpins all investment choices.
The portfolio has almost 240 holdings, which adds a large amount of diversification and reduces stock-specific risk. However, the nature of the fund is to find stocks that have been beaten up by the market, so sentiment could continue to go against them.
As a result, investors in this fund should expect to encounter a bumpy ride from time to time.
Darius McDermott, managing director of FundCalibre, the fund ratings and research provider, says: “This fund is one for investors who like the deep-value approach and understand that this means it may underperform in some environments. Great for the long-term though.”
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|HSBC Holdings PLC||3.58 %|
|BP PLC||3.40 %|
|Royal Dutch Shell PLC B||2.96 %|
|Lloyds Banking Group PLC||2.69 %|
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|Consumer Defensive||6.32 %|
Hugh Sergeant graduated from the London School of Economics. He joined Gartmore in 1987 as a UK equity graduate trainee, researching a number of sectors and managing institutional funds before leaving to join Phillips & Drew in 1990. He became Head of Smaller Companies in 1997. In March 2000 Hugh was promoted to Head of UK equities and Chairman of the UK Equity Committee. Hugh joined SG Asset Management in October and is a member of the UK equity team.
Data provided by Morningstar.
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