River and Mercantile UK Recovery Fund B Inc

UK Growth

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
Name
River and Mercantile UK Recovery Fund B Inc
Manager
River and Mercantile AM LLP
Type
Open Ended Investment Company
ISIN
GB00B614J053
Sector
UK All Companies
Launched
01/04/2009
OCF
1.1 %
Risk Rating
3
3 Year Sharpe
0.67
3 Year Alpha
0.99
Yield
2.2 %
Benchmark
MSCI UK IMI NR LCL
The investment objective of the Fund is to achieve capital growth. The Fund will achieve its investment objective through investing in a portfolio which will primarily consist of UK equities that meet the manager's recovery criteria of a turnaround in company profitability over the longer term. The Fund will not be restricted by reference to a benchmark, sector constraints or company size. For these purposes UK equities includes, but are not limited to, equities listed in the UK, equities of companies domiciled in the UK and equities of companies which have substantial operating activities in the UK.
Holding %
HSBC Holdings PLC 3.32 %
BP PLC 3.19 %
Royal Dutch Shell PLC B 2.74 %
Lloyds Banking Group PLC 2.46 %
Prudential PLC 1.96 %
British American Tobacco PLC 1.59 %
BHP Group PLC 1.43 %
Anglo American PLC 1.40 %
Rio Tinto PLC 1.39 %
Standard Chartered PLC 1.32 %
Region %
United Kingdom 74.79 %
Eurozone 7.12 %
Sector %
Financial Services 22.07 %
Industrials 14.94 %
Consumer Cyclical 14.28 %
Energy 12.55 %
Technology 10.28 %
Basic materials 9.21 %
Consumer Defensive 7.48 %
Name
River and Mercantile AM LLP
Address
EC2R 5AL, London, United Kingdom
UCITS
Yes
Legal Structure
Open Ended Investment Company

Managers

Hugh Sergeant
Joined 07/17/2008

Hugh graduated from the London School of Economics with a degree in Economics. He joined Gartmore in 1987 as a UK equities graduate trainee and moved to Phillips & Drew in 1990, managing UK equities throughout his twelve years there. He became Head of Smaller Companies in 1997, establishing a new team and launching the UBS Smaller Companies Fund. In March 2000 Hugh was promoted to Head of UK Equities at UBS Global Asset Management and Chairman of the UK Equities Committee. He joined Societe Generale Asset Management in 2002 where he was Head of UK Equities, manager of the Growth strategy and co-manager of the Special Opportunities Fund. Hugh was one of the founding members of River and Mercantile Asset Management LLP, joining in August 2006. Hugh is Chief Investment Officer at River and Mercantile Asset Management and manages the UK High Alpha, UK Recovery, Global Recovery and Global High Alpha strategies.

Data provided by Morningstar.

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