Fund Focus: UK equities
Best performer YTD:Standard Life Synergy UK Smaller Companies +29.2%
Worst performer YTD:AXA Financial Blackrock UK Index - 2.9%
WHILE IRISH equities may still be floundering, across the water the outlook is a little brighter, with the British market showing signs of recovery.
According to MoneyMate, so far in the year to August 27th, Irish gross domestic funds invested in UK equities have returned 4.4 per cent on average, or 11.9 per cent in the previous 12 months.
Top of the heap is Standard Life’s smaller companies fund, which is up by almost 30 per cent so far this year, and has returned 43.7 per cent in the 12 months to August 27th.
The fund aims to provide long-term growth by investing predominantly in the shares of smaller companies listed on the UK stock market, with a maximum market capitalisation of £1.5 billion.
According to Harry Nimmo, head of smaller companies investing with Standard Life, the fund is “trying to buy tomorrow’s companies today”.
“We specialise in high-quality growth businesses, which have certainty about earnings,” he says, adding that the fund also favours companies which are still run by their founders, with 15 out of the 30 stocks in the portfolio fulfilling this criteria. “It brings real stability,” he notes.
The fund’s greatest allocation is to consumer services, which account for 21.9 per cent of the fund, followed by industrials at 16.8 per cent and technology at 14.3 per cent.
Its largest weighting is in online retailer ASOS, at 5.2 per cent, while the fund also has a significant holding, at 2.9 per cent, in Dublin and London-listed Paddy Power. Given the betting company’s international reach and potential for future growth, it is “just the sort of business we love”, says Nimmo.
Another fund favourite is Supergroup, which produces the Superdry clothing range. Since it listed last March, its share price has doubled.
While Nimmo recognises that markets remain tentative about the prospects of the dreaded “double-dip recession”, he believes a recovery is coming, buoyed by emerging markets.
At the other end of the scale, AXA Financial Blackrock UK Index, which tracks the return of the MSCI UK index, is down by 2.9 per cent, although in the year to August 27th it has returned 6.4 per cent.
