AXA Framlington UK Mid Cap

AXA Framlington UK Mid Cap fund is unashamedly growth-orientated. While it naturally focuses on medium-sized companies, its manager will be pragmatic about including select opportunities from the smaller companies space, as well as letting winning mid-cap holdings grow into larger-sized companies.

Our opinion

Manager Chris St John has an excellent track record on the AXA Framlington UK Mid Cap fund, which he has managed since launch in 2011, as well as on other funds he has run previously with similar mandates. We like the robust process and the fact that Chris uses thematic long-term ideas to help construct a portfolio of dynamic growth companies that should benefit from these trends. The flexibility to invest in the FTSE 100 and small-cap space lets him run winners and invest early in strong growth stories.

Fund manager

Chris St John joined AXA Investment Management in 2005 as a fund manager on the UK small-cap desk. In 2008 he was appointed to run the UK smaller companies fund before he took charge of the UK Mid Cap fund from its inception in 2011. He was made deputy of the AXA UK Select Opportunities fund in 2013, ahead of taking over from veteran manager Nigel Thomas when he retired. Prior to joining AXA, Chris worked at F&C Asset Management where he also generated a good track record in small and mid-cap investing. He is also a Chartered Accountant and graduated from Durham University with an honours degree in Philosophy and Psychology.

Chris St John - AXA

We use our eyes, ears, experience and judgement to seek out companies that can grow to become much larger businesses over time.

Chris St JohnFund manager

Investment process

Manager Chris St John will look for companies that are high quality (both financially and in terms of their management teams) that can show sustained profitability, and that exhibit future growth potential.

The first stage of Chris’s process is a thematic overview looking at key themes that should drive growth going forward, such as increasing life expectancy, digital transformation and a low-carbon economy.

The second stage is individual company analysis. Chris will look at factors such as the management’s track record in delivering earnings and its funding strategy. He will also look for positive signs such as a company experiencing organic growth, exhibiting good pricing power and having high barriers to entry. He will also look at quantitative factors like earnings yield and growth and dividend growth potential to demonstrate how efficient the company is at operating its business.

Chris will then meet company management. This is a very important part of the process. It allows him and his team to test their analysis and interpretation against the people who are set to implement it.

Having established the investment case for a company, Chris then moves on to valuations. Here, he will look at a variety of metrics for comparison purposes. While he wants to find growth, he doesn’t want to overpay for it.

ESG

ESG - Limited  

As a firm, AXA has company-wide investment restrictions based on specific ESG risks – an approach that has been very forward thinking. It monitors and excludes multiple industries for all assets under management (e.g: controversial weapons, palm oil and soft commodities). It has also recently enforced and strengthened its stance on coal-based power production with limits and exclusions on revenue, power generation, expansion and mining development. Beyond this, the fund has no further restrictions. Governance is, however, an important consideration, and Chris always engages with management teams of his portfolio holdings.

Risk

While benchmarked against the FTSE 250 (ex Investment Trusts) AXA Framlington UK Mid Cap fund can run into the larger cap FTSE 100 (up to 15%), as well as own some names in the AIM and FTSE Small Cap markets. Due to the fund having slightly different exposure to the benchmark, it will often have higher exposure to companies with revenues from across the globe. This may lead to a larger impact from global currency movements. Risk parameters include positions up to 4% and an independent risk team will monitor risk at individual holding and portfolio level.

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