MI Chelverton UK Equity Growth
MI Chelverton UK Equity Growth invests in businesses outside the FTSE 100. The fund is governed by a comprehensive and disciplined screening process which allows the team to target cash-generative companies capable of funding their own growth. Most of the portfolio is invested in small and medium-sized companies.
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James Baker, a history graduate from Cambridge University, has over 30 years of experience in equity markets, focusing on UK small and mid-cap stocks. Notably, he spent 11 years at ABN Amro from 1999 to 2011, where he was part of the highly-ranked small and mid-cap sales team. Before joining Chelverton, James was the Assistant Fund Manager for the Rathbone UK Recovery Fund.
Edward Booth graduated from the London School of Economics with a degree in Economics with Economic History, and qualified as a Chartered Accountant at Deloitte, where he focused on the Insurance sector. Prior to joining Chelverton, he worked as a Business Analyst for Barclays, focusing on a number of areas including Investment Bank Revenue and Group Capital performance.
Henry Botting joined Chelverton Asset Management in August 2021 as an Assistant Fund Manager. Before this role, he worked on the Equity Sales team at finnCap, focusing on UK small and micro-cap companies. Henry has a degree in Economic and Social History from the University of Edinburgh and previous investment management experience at Rathbones and OLIM. He is also a CFA Charterholder.
James Baker, a history graduate from Cambridge University, has over 30 years of experience in equity markets, focusing on UK small and mid-cap stocks. Notably, he spent 11 years at ABN Amro from 1999 to 2011, where he was part of the highly-ranked small and mid-cap sales team. Before joining Chelverton, James was the Assistant Fund Manager for the Rathbone UK Recovery Fund.
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Company Description
Founded in 1998, Chelverton is a small boutique asset manager which specialises in small and medium-sized UK companies. The company's philosophy is to focus on doing a few things extremely well. The firm was initially best known for its Chelverton UK Equity Income fund. But the UK Equity Growth fund is also becoming increasingly well known.
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Quote from the Fund Manager
By focusing the portfolio on highly cash generative mid & small-cap companies that can fund their own growth- I believe we can generate strong long-term performance without taking on excessive risks.
James Baker
Co-Manager
Investment process
The fund invests in growing businesses which have plenty of cash on their balance sheets and can finance their own growth. High margins and shareholder-friendly management are also important factors. These ideas are built into MI Chelverton UK Equity Growth’s initial screening process, which looks at all UK stocks below the FTSE 100 (the UK’s largest 100 companies). The results of the screen leave them with about 250 stocks for further qualitative analysis. James and the team will then assess the companies’ management teams and determine the predictability of their revenues, as well as the sustainability of profits. The final part of the process looks at the companies’ valuations.
Risk
MI Chelverton UK Equity Growth has a bias to smaller companies, which can be a higher-risk area of the market, but it is well diversified with a portfolio of around 100 stocks. Risk is also managed in the initial screening process, which strips out heavily indebted companies, and in the qualitative assessment which favours businesses with strong recurring revenues which are less susceptible to the economic cycle.
ESG
ESG - Integrated
Chelverton does not class its funds as sustainability focussed or impact funds, however, ESG issues are integrated within its risk assessments and investment process. As well as being supported by a dedicated ESG team, the fund managers also have access to various ESG data sources, though they prefer to use internal risk control techniques such as active engagement. They explore management issues such as the integration of sustainability strategy within business plans and the company's focus on ESG risk and opportunity. Their process relies heavily upon qualitative data to enable a dynamic understanding of company resilience and agility, focussing on material ESG issues as a part of this process. Committed holdings are established steadily over time, and managers engage regularly with management to build required conviction.
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