Ten of the best: managers at the top of their peer groups
Finding the best fund managers is both a science and an art form: you need experience and gut feel...
Going back to school is now the third largest seasonal shopping event in the UK – behind Black Friday and Christmas – with parents collectively parting with almost £1 billion*.
I feel like I’ve spent about half of that in the past few days. Shoes, shirts, jumpers, pens… and don’t get me started on Smiggle bags and pencil cases – I almost had to remortgage after a trip to that shop. Cue the muttered comment: “I should buy shares in this company…”
Unfortunately The Just Group, parent company of aforementioned overpriced, but very colourful and “everyone else has them”, bag and stationary shop (my views are my own… etc, etc) is not a listed company. But it did get me wondering: how can I invest in this growing ‘consumer’ trend?
Here are some ideas to perhaps make next year’s shop a little more gratifying.
Tesco and Next are popular for uniform and shoes. Tesco is in the top ten holdings** of Threadneedle UK Extended Alpha, Artemis Income and BlackRock UK Absolute Alpha, while Next is a top holding in Edentree Amity UK – and has been in the fund for three decades!
Co-manager Ketan Patel also told us recently: “The long tenured CEO of Next has been one step ahead of market trends, generating excellent returns for investors as a result – on average 16% per annum since 1988, over three times more than M&S, which it surpassed as the UK’s largest clothing retailer by sales in 2012.”
JD Sports is a popular shop for shoes and bags (cheaper, albeit less colourful ones). It’s a holding** in Marlborough Special Situations, Marlborough UK Multi-Cap Growth, Smith & Williamson Enterprise and ASI Global Smaller Companies.
Manager of the latter fund, Alan Rowsell, said to us recently: “We believe JD Sports will continue to expand as a result of their brand and recent acquisitions. Following the purchase of Finish Line in the US, this gives them a retail footprint in this key market and furthers its plan to become a global partner for major sportswear brands.”
Originally a construction company when it launched in the 1840s, Pearson is a multinational heavyweight in the publishing and education industry. The focus on school, higher education and professional areas includes the likes of textbooks and digital technologies for both teachers and students.
A top 10 holding** in Jupiter UK Special Situations, Schroder Income and Schroder Recovery funds, manager of the latter two funds, Kevin Murphy, says: “Pearson has gone through a fairly extensive overhaul over the last few years to pay back debts, strip out costs and focus on its digital offerings. Given the strength of the balance sheet, we remain of the view that Pearson is an attractive investment, and still priced below its fair value.”
It is also a top ten holding** in Fidelity Special Values investment trust. Manager Alex Wright said in May: “Many investors believe the company is in a prolonged structural downturn. What I believe they are missing is the enormous investment Pearson has been making into digital education services and the positive effect this could have on the company. While the UK market lacks many technology leaders, in Pearson it may soon be able to boast the world’s leading digital education provider.”
I’m not sure about where you live, but where I am it seems to be ‘the thing’ to give a first mobile phone to a child when they start secondary school.
Apple and Samsung would seem appropriate stock ideas for this. Apple is a top ten holding** in AXA Framlington Global Technology and BMO Responsible Global Equity funds for example, while Samsung is a top ten holding** in Invesco Asian, Jupiter Asian Income and T. Rowe Price Global Focused Growth Equity.
Telefonica Europe is perhaps a less obvious potential beneficiary. A global telecommunications provider, it operates under the O2-brand name in Europe and is the top holding*** in the Aviva High Yield Bond fund. Manager Chris Higham said recently: “As the incumbent operator in Spain, they have a strong position delivering TV content, high-quality fibre broadband and mobile across key European markets. Our team have met management on many occasions and believe they have a great track record in executing their strategy, despite facing intense competition from other telecom players over recent years.”
*Source: Mintel study, August 2018
**Source: FE Analytics, 22 August 2019
***Source: Fund fact sheet, 30 June 2019