Rathbone UK Opportunities
Rathbone UK Opportunities is a flexible fund targeting quality growth businesses. The manager looks to take advantage of cheap UK valuations, but avoids the ex-growth, large-cap dinosaurs. She combines structural winners with a strong core of high-quality compounders and the final portfolio consists of around 50 to 60 holdings, with a bias to mid-cap stocks.
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Alexandra Jackson, Lead Manager Alexandra is the manager of the Rathbone UK Opportunities Fund, which was renamed from the Rathbone Recovery Fund on October 23, 2017. She was appointed co-manager in June 2014 and became the sole manager in August 2017. Previously, she was an assistant fund manager on the Rathbone Global Opportunities Fund. Alexandra joined Rathbones in January 2007 and graduated with a BA Hons in Economics from the University of Durham (University College). She also holds the Investment Management Certificate and is a CFA charterholder.
Alexandra Jackson, Lead Manager Alexandra is the manager of the Rathbone UK Opportunities Fund, which was renamed from the Rathbone Recovery Fund on October 23, 2017. She was appointed co-manager in June 2014 and became the sole manager in August 2017. Previously, she was an assistant fund manager on the Rathbone Global Opportunities Fund. Alexandra joined Rathbones in January 2007 and graduated with a BA Hons in Economics from the University of Durham (University College). She also holds the Investment Management Certificate and is a CFA charterholder.
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Talking Factsheet
Investment process
Rathbone UK Opportunities is a truly active and nimble multi-cap fund with a clear bias in favour of quality growth. Alexandra is agnostic when it comes to market cap as long as a company is growing and she will therefore invest in small caps all the way through to mega caps although her sweet spot is usually in the mid-cap part of the market.
The initial universe is the FTSE All Share plus FTSE AIM. This is reduced to around 700 stocks after a filter for liquidity and growth characteristics. Every company is put through a 10-part scorecard which assess several factors. There are three parts to the scorecard: fundamental analysis using a Porters Five Forces-style company analysis, an industry outlook and a governance assessment; financial analysis with an assessment of return on capital, a balance sheet review and accounting quality; and valuation/timing.
This part of the process helps to eliminate any emotion from investment decisions, distinguishing between genuine opportunities and potential value traps.
If a fund passes the scorecard the team will build a full model on the company and conduct further analysis, undertaking company management meetings and site visits to build a clearer picture. Alexandra is pragmatic when making investments and macro factors, timing and potential upcoming catalysts will all be considered before an investment is made.
Positions are constantly reviewed with regular face to face updates with management, updates to scorecards and regular challenges to current holdings. A change in a company’s scorecard or valuation will prompt a review of the stock and may trigger a sale.
Risk
Mid and large cap stocks are limited to a maximum of 5% in the portfolio. Small caps and AIM stocks are limited to a maximum of 3%. The fund is typically overweight traditional growth sectors such as technology and underweight financials, materials, consumer staples, energy and utilities.
The heavy mid cap and quality growth bias means the fund is likely to deliver very different performance to the UK market and performance can be lumpy. The fund is generally a little more volatile than its average peer.
ESG
ESG - Integrated
Rathbone has a strong presence in sustainable investing, though this is not one of its explicit ESG funds. However, that is not to say Alexandra ignores ESG issues. She integrates the evaluation of ESG factors into the investment process in order to fully assess the business, financial and valuation risk of an investment. While all factors are considered, this does not lead to any rules around exclusions. If Alexandra identifies high ESG risks associated with a stock, she can still invest in it, should she feel the risk is already reflected in the share price. That being said, the fund’s quality focus will lead to a natural bias away from stocks traditionally considered ESG laggards. The scores themselves are determined through inputs from several third-party sources. If any controversies or issues are flagged, Alexandra will use these as a point of reference to engage with a company. These scores are built into the fund’s scorecard and therefore considered alongside all other factors. Beyond the score itself, the direction of travel will also be important, with improving scores looked upon favourably, and those deteriorating a point of concern and for further analysis. Alexandra has a particular focus on governance within the fund, as the companies in her mid-cap space can be influenced heavily by management decisions.
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