Unicorn optimistic on UK recovery

At first glance, it looks like the fund's had a pretty average year, yield wise. When we first tipped the fund in 2010, it was yielding more than 5 per cent, but it's now down to 3.31 per cent - well below its IMA sector (UK equity income) average of 4.25 per cent. When it comes to performance, however, it is top of its Morningstar sector (UK equity income) over three and five years (to 6 December 2013), with a 23.85 per cent return and 31.56 per cent return, respectively.

Historically, small and mid caps have tended to outperform larger cap stocks during periods of recovery, and Mr McClure's fund focuses on the small and mid cap space - he currently holds no FTSE 100 companies at all.

So if history's anything to go by, things could well be looking up for the fund.

Ben Yearsley, head of investment research at Charles Stanley, said the fund is a "good diversifier" because of its small and mid cap focus. However, he has slight concerns because the fund has grown fivefold in size over the past year alone: "There will come a point when it becomes so big that the strategy will need to be changed. We don't yet know when that point will come, though."

Mr McClure is keen to dispel what he believes is a "misconception" about income funds that focus on small and mid caps; that such companies underperform their growth-focused rivals.

"It's rubbish," he says. "If you're a good business, you should be able to pay a dividend and be able to fund your own growth, no matter what your size."

And he draws on recent research from Numis, which shows that from 1955 to 2012, the highest yielding companies (defined as the top 30 per cent) in the Numis smaller companies index have an annualised return of 18.4 per cent, while the lowest yielders (defined as the bottom 30 per cent) returned just 9.1 per cent."

Mr McClure has also been increasing his weighting to more cyclical positions within his portfolio over the past few months. He's made several new additions to his portfolio recently, too.

He likes Conviviality Retail (CVR) - the owners of Bargain Booze, a chain of off licences in the North West. He said: "We supported the company at IPO about two months ago and it has done very well. The chief executive is ex-Waitrose and ex-Sainsbury's and knows a huge amount about the market. They operate a franchising programme and recently bought a London chain of wine stores called Wine Rack, which isn't currently franchised, but will be."

Also on his list of darling stocks is John Menzies (MNZS) - a firm well known for its newspaper distribution division. He's interested in the aviation side of the business, though, which generates an increasing proportion of the company's profits. The ability to turn round an aircraft in a quick, safe and efficient manner is a crucial role for budget airlines, in particular. Menzies Aviation handles over one million flights and 77m passengers a year, and the division has a growing geographic footprint, serving over 500 customers in 30 countries worldwide.

UK Mail Group (UKM), the national parcel and mail delivery business, is also a keeper for Mr McClure, as it has benefited from the explosive growth in online retail sales.

"With more and more transactions taking place, online parcel volumes in the UK have increased dramatically. The company has an extensive national distribution network and generates sufficient levels of cash to both pay a healthy dividend and fund future investments in automation and increasing the network capacity," he said.