13th January 2015
Rising Stars - less well known Elite Rated managers we regard as having a bright future
FundCalibre’s Elite Rating is a stamp of approval that we bestow on funds, following our comprehensive 2 stage analysis. This combines our unique AlphaQuest system with meeting all managers to assess their ability to continue to do well. Below are a selection of Elite Rated managers that are less well known, but who we regard as rising stars.
Alex Savvides, Elite Rated JOHCM UK Dynamic
The Elite Rated JOHCM UK Dynamic fund was designed, and has been managed since launch by, Alex Savvides. Alex joined JOHCM as assistant manager on the UK Growth fund, having previously provided investment ideas to the lead manager, Mark Costar (the assistant manager on this fund).
Alex is a relatively young manager, who has proved himself to be a talented and determined investor. Virtually undiscovered by the broader investment community, the fund benefits from an effective investment process, a strong manager and a stable company environment, which has led to strong and consistent returns.
Alex invests in UK companies that are undergoing substantial positive change that is unrecognised in the current share price, thereby benefiting from a recovery in the business. Each holding in the portfolio must pay a dividend, a discipline designed to underpin the valuation of the holding and limit the impact of mistakes.
The fund has been broadly in line with the level of risk associated with the UK stock market, despite a high level of exposure to traditionally more volatile mid-size companies. This reflects the risk dampening impact of the dividend discipline.
Hugh Yarrow, Elite Rated Evenlode Income
Hugh Yarrow is a potential heir to Neil Woodford’s crown of income investing. Through the Elite Rated Evenlode Income fund, Hugh only invests in high quality cash-generative businesses with sustainable returns. Alonside portfolio manager, Ben Peters, Hugh avoids businesses with high capital expenditure and will never own miners or oil and gas producers. The fund takes a long-term view, with turnover typically less than 20%. Hugh and Ben construct a universe of high quality stocks before using a DCF analysis to determine which valuations are cheapest.
The fund aims to produce excess returns with reduced risk, while targeting reduced volatility by investing in high quality defensive businesses. We expect the fund to outperform in down markets and underperform in a strongly rising market. The fund is highly concentrated, with its top 10 holdings making up 55% of the fund. These businesses’ revenue streams are extremely well diversified, helping to reduce any stock-specific risk.
Hugh is not afraid to radically depart from benchmark and ignore entire sectors. The investment process is extremely well defined. It is based on the simple, but effective, idea that over the long run quality will outperform and his high conviction, long-term approach is refreshing to see. The fund’s universe is relatively small, although this is somewhat mitigated by investing in some overseas stocks.
Hugh Yarrow graduated from Edinburgh University with a first class degree in philosophy and Mathematics. From 2002 to 2009 he managed several equity income funds for Rathbone. He joined Wise in 2009 and launched the Evenlode Income fund in October 2009.
Mark Martin, Elite Rated Neptune UK Mid Cap
Mark joined Neptune in February 2008 as a senior analyst and is now manager of the Neptune UK Mid Cap fund. He is also responsible for global research on the healthcare sector.
Focusing on economic recovery plays, structural growth stories and corporate turnarounds in some of the most exciting sectors of the UK market, Mark is one of the UK most exciting young fund managers. Drawing on Neptune’s global research output, Mark adopts a balanced construction, with at least 20% of the portfolio invested in three different ‘silos’. These silos are recovery plays; structural growth stories and turnarounds.
Investing in mid-cap (FTSE 250) stocks does come with additional risk/volatility and Mark can also consider any of the top 50 FTSE Small Cap index constituents. He does, however, measure valuations against both peers in industry as well as against historical levels, which helps to eliminate overpaying for stocks.
In 2002, Mark graduated from Oxford University with a degree in Classics and went on to qualify as a solicitor at Allen & Overy in their Private Equity group.
James Thomson, Elite Rated Rathbone Global Opportunities
James' High-quality cooking or ‘secret sauce’ investment philosophy, as he likes to call it, clearly identifies and focuses on the specific ‘ingredients’ or qualities that he likes to see in companies and those that he would actively look to avoid. He adds value through high-impact stock-picking; being able to assess and take calculated risks to uncover hidden, potentially lucrative, investment ‘gems.’
His fund changed its approach after 2008 and added a core defensive bucket of reliable growth stocks. These core holdings have helped reduce the fund’s volatility. The value of this new strategy was evident in 2011 when the market lost 9.14% and the fund only lost 4.67%. James has a very strict sell discipline and will cut stocks quickly when structural issues arise.
A truly active unconstrained growth fund run by a long-standing experienced manager. James’ high conviction contrarian strategy has proven itself over many years. He is not afraid to admit his weaknesses or past errors - a refreshingly honest approach, which allows him to concentrate on his core strengths.
Thomas Moore, Elite Rated Standard Life UK Equity Income Unconstrained
Thomas runs the Elite Rated Standard Life UK Equity Income Unconstrained fund – this fund has had a consistently excellent track record by investing across market caps for the best income stocks. Thomas’ approach is very different from many of his peers, with the fund being a concentrated best ideas portfolio, constructed with no regard to the index. Thomas’ analytical flair, is a significant contributor to the success of the fund. This fund offers something a bit different from many in the sector.
Thomas is also a musician and played the cello since he was five, he sees parallels with managing a portfolio. He says there is science and art in both activities and that need to have a clear sense of what sound you are trying to produce and how you are going to achieve that sound from the different notes that you play.
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