VT Tyndall Unconstrained UK Income

VT Tyndall Unconstrained UK Income is a high conviction, highly differentiated mid-cap focused UK income fund. Simon Murphy is a very experienced manager and this fund offers something different with its combination of premium yield and dividend growth stocks.

Previously VT Tyndall Real Income

Our opinion

Simon is a highly experienced manager with a long history managing UK equities. We applaud the fund's high conviction approach to active management and low active management charge. The fund has started well despite a difficult period for mid-cap stocks. We will be watching the fund closely in the future.

Company description

Tyndall is a small boutique investment firm which is independently managed and owned. The company runs a number of unconstrained strategies which are managed by experienced managers, who have all joined from larger firms. It has three main strategies; Global Select, North American and Real Income. There is a heavy emphasis on high conviction active management, designed to offer a real alternative to ‘traditional funds’. The company has around £600m in assets under management.

Fund manager

Simon Murphy is an extremely experienced manager. He qualified as a chartered accountant and then joined M&G investments in 1997, where he worked on UK equities. He went on to run the M&G UK Growth fund from 2004 to 2007. In 2008 he moved to Old Mutual Global Investors where he headed up the large cap UK equity team. He also managed the Merian UK Equity fund. He joined Tyndall just before Covid and took over the fund in February 2020.

Simon MurphyFund manager

Investment process

Simon believes that most UK equity income funds are dangerously concentrated in just a few stocks and sectors. There is also very little differentiation between many of the big UK equity income funds. Simon believes that much better returns and diversity of income can be achieved by investing further down the market cap spectrum. As such the fund has a heavy mid-cap bias.

The VT Tyndall Unconstrained UK Income fund has no benchmark constraints and will look very different to the index. It highlights research which shows that funds with a higher active share typically deliver better returns and outcomes for clients over time. A big part of the funds philosophy is to have the freedom to be unconstrained and invest anywhere. For this reason, the fund has no structural bias to any particular investing style or sectors.

This is a stock picking fund. Stocks are divided into two categories. Premium yield and dividend growth. Dividend growth stocks will have structural growth and rising dividends, while premium yield stocks typically have solid cash cover and low gearing. As the name suggests, premium yield stocks must have a yield which is at a decent premium to the wider market.

Simon avoids stocks with high operational and financial gearing. One or the other may be acceptable but the combination together can get you into trouble. Simon’s stock picking is focused on forecasting dividends and ensuring the sustainability of the dividend well into the future.

The portfolio is highly concentrated at just 30-35 names, with no structural style bias within the process.

ESG

ESG - Limited

The fund’s major ESG focus is around governance and the quality of company management. Simon strongly believes that the right management team is critical to a good investment but also that good managers are likely to manage ESG risk far better. Simon will always meet the managers of any company prior to any investment. Meeting management regularly is an important part of the fund’s process. As part of its unconstrained philosophy the fund has no permanent exclusions or restrictions.

Risk

Due to its active approach, returns are likely to differ markedly from other UK equity income funds. With greater exposure to mid-cap names we’d also expect more volatility from the fund versus its peers and the index. All risks are monitored in the portfolio, with risk consideration beginning at the stock level with rigorous company research.

See more

The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.