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A multi-cap UK equity fund managed according to a 'growth at the right price' approach. In seeking investment ideas, the manager combines structural growth themes with detailed company analysis. Within its sector, the fund features in our 'Growth-Biased' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 6. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 6 means the fund’s historic volatility is between 15% and 25%.
Our analysis indicates that the fund’s volatility is consistent with the benchmark. The fund has typically invested a sizeable portion in mid and smaller caps, which have the capacity to demonstrate higher volatility in times of stress, although the focus upon high quality, growth franchises can be an equal and opposite offsetting factor. Different share classes could have differing SRRI scores.
The fund is managed by Nigel Yates, with Chris St John, formerly the lead manager, supporting him as deputy. Mr Yates joined the firm in 2021, working closely with Mr St John before moving into the lead manager role in December 2023. He previously worked at the NFU Mutual, managing UK multi-cap funds. The UK investment team incorporates several experienced manager/analysts, who run a variety of UK equity mandates. They work in a highly collegiate manner and draw upon the knowledge of other managers and industry experts from within AXA Investment Managers.
The manager pursues a ‚ 'growth at the right price' (GARP) philosophy but typically has a growth bias, as he believes that investing in companies with above-average earnings and cash returns on invested capital will deliver superior performance over the long term. He seeks to invest in such companies when share prices do not reflect his view of their prospects. Bottom-up analysis is the principal driver of investment decisions, but top-down themes are also incorporated into the process.
The fund usually features 60-90 holdings and is not constrained by relative benchmark positioning. It is constructed on a multi-cap basis, with stock diversification the primary risk control. Compared to the index, it is typically biased towards mid and small-cap companies that have attractive growth potential. Stock weightings are a function of opportunity, but small caps are typically sized at 0.1% - 1% at cost, with mid and larger-cap companies included at 2%-4%. Risk reviews are undertaken by the Investment Analytics Team, with weekly reviews of risk and performance.
The process is driven by bottom-up stock selection, favouring growth companies that demonstrate attractive valuation characteristics from across the market capitalisation range. Macro and micro-economic research is used by the team to identify economic themes and trends that are likely to drive market growth over the long term. Stock analysis is then focused upon the areas that are positioned to benefit from these trends. Examples of transformative themes are: connected consumer, automation and ageing and lifestyle. The aim is to create a progressive, forward-looking portfolio, drawn from global perspectives.
The bottom-up work incorporates qualitative and quantitative analysis, with an emphasis upon meeting companies. On the qualitative side, areas of focus are: the track record of the company management; organic growth; pricing power; barriers to entry; customer diversification; the funding structure; and, shareholder friendliness. On the quantitative side, they look at earnings yield and growth, dividend growth, free cash flow and return on capital. The draw great value from their meetings with company management, where they seek to test the quality of the leadership and the business franchise, as well as the strategy for growth. On the valuation front, each stock is considered for its growth potential, relative to the current stock price.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.
At The Adviser Centre, our primary aim is to support financial professionals in their fund selection and suitability work through independently-minded research, borne of decades of industry experience. Our process is framed by the fundamental concepts of “quality”, “value” and “utility”, through which we answer the key questions of why to invest in a fund, how it is likely to behave and how it can be deployed.
The Adviser Centre team members are some of the most experienced in the fund research industry. We can always look forward to robust and constructive discussions and we have great respect for their views and perspectives, which, given the breadth of their fund and market knowledge, come from an extremely well-informed position.
We have known and worked with the team for several years and we value their experience and the insights they provide to our own investment process. The service differentiates itself by its more focused nature and the information on their factsheets is useful in emphasising a fund’s key mandate, exposure and style biases, helping to explain the risk/return journey that our customers can expect.
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