There are hundreds of UK equity growth funds, so identifying market-beating top-performers can be a daunting task. We have already tipped some of the better ones, for example, IC Top 100 Funds Liontrust Special Situations (GB00B0N6YF70) and M&G Recovery (GB0031289217), as well as Cazenove UK Opportunities (GB0031092728). However, another one you may wish to consider is Ecclesiastical UK Equity Growth (GB0008445982).
- Strong performance
- Reasonable size
- Experienced manager
- Diversification
- Smaller company risk
This fund has beaten its benchmark, the FTSE All-Share, over one, three and five years, and is among the top 20 performing funds out of more than 230 over those periods.
"This fund has an excellent long-term record," says Rob Pemberton, investment director at HFM Columbus. "It is a multi-cap UK equity fund but with a bias to small- and mid-cap stocks, around 50 per cent of the fund. It is also biased to domestic industrial and consumer stocks, but has a light weighting to big international stocks such as oils and miners frequently found in UK equity funds, so has more a UK-centric focus."
The fund's manager, Andrew Jackson, believes that small and mid caps are an important source of under-researched and under-valued opportunities, which fits his approach of looking for out-of-favour or under-valued investments, which can demonstrate a distinct and sustainable competitive advantage.
Ecclesiastical UK Equity Growth aims for long-term capital growth with a reasonable level of income by investing in good companies at attractive prices, and Mr Jackson blends value and growth approaches with the aim of preserving capital while delivering superior relative performance.
IC TIP RATING | |
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Tip style: | GROWTH |
Risk rating: | HIGH |
Timescale: | LONG TERM |
Investments are made for the long term, as Mr Jackson and his team believe frequent trading has the potential to increase costs and decrease returns.
Recent portfolio adjustments include trimming and adjusting the cyclical industrial element of the portfolio to reflect the greater challenges these companies face, with a tilt towards the UK, self-help situations and secular growth.
Mr Jackson has run this fund since 2003 and has more than 20 years' experience as a fund manager, in particular with UK small and mid caps.
The fund is also a reasonable size at £106.46m, another reason why Mr Pemberton favours it. He is concerned that very large funds risk being closed to new investors to prevent them becoming too large to manage, thereby threatening returns to existing investors.
Read more on small alternatives to monster funds
The fund has a reasonable total expense ratio of 1.34 per cent, below the typical level for equities funds of 1.6 per cent. It can be bought on a number of fund platforms, including Barclays Stockbrokers, Chelsea Financial Services, FundsNetwork, Hargreaves Lansdown, TD Direct Investing, Willis Owen and Sippdeal.
While the fund has made strong cumulative returns, its annual returns have been volatile with large variations from year to year, as is usual with a fund biased towards small and mid caps. But the portfolio is well diversified by sector and size.
Investors with substantial direct holdings in UK shares will have to watch any overlap with their existing portfolio. However, if you have a long-term investment horizon and a higher-risk appetite, then this looks like an excellent addition to your core UK equity growth exposure. Buy.
ECCLESIASTIAL UK EQUITY GROWTH FUND A Inc (GB0008445982) | |||
PRICE | 188.6p | MEAN RETURN | 22.35 % |
IMA SECTOR | UK All Companies | SHARPE RATIO | 1.46 |
FUND TYPE | Open Ended Investment Company | STANDARD DEVIATION | 13.48 % |
FUND SIZE | £106.46m* | MINIMUM INVESTMENT | £200* |
No OF HOLDINGS | 99* | TOTAL EXPENSE RATIO | 1.59% |
SET-UP DATE | 13 Sep 1999 | YIELD | 1.18% |
MANAGER START DATE | 2003 | MORE DETAILS | www.ecclesiastical.com |
Source: Morningstar, *Ecclesiastical.
1-YEAR CUMULATIVE TOTAL RETURN (%) | 3-YEAR CUMULATIVE TOTAL RETURN (%) | 5-YEAR CUMULATIVE TOTAL RETURN (%) | |
Ecclesiastical UK Equity Growth A | 39.30 | 74.50 | 70.19 |
FTSE All-Share TR GBP | 21.97 | 37.56 | 35.27 |
Peer Group Average | 25.76 | 40.26 | 37.30 |
Source: Morninstar as at 14 June 2013
Top 10 holdings as at 30 April 2013
Ashtead Group | 2.81 |
GKN | 2.45 |
Howden Joinery | 2.32 |
GlaxoSmithKline | 2.28 |
Next | 2.27 |
Unilever | 2.16 |
Rolls-Royce Holdings | 2.13 |
Oxford Instruments | 2.08 |
Spectris | 1.89 |
Vodafone | 1.85 |
Sector breakdown
Industrials | 29.97 |
Consumer Services | 19.05 |
Financials | 11.42 |
Consumer Goods | 10.51 |
Health Care | 6.82 |
Technology | 6.57 |
Basic Materials | 5.1 |
Oil & Gas | 4.88 |
Other | 4.77 |
Cash | 0.91 |