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The UK All Companies biggest fund turnaround stories

We analyse the biggest fund turnaround stories in the UK All Companies sector in 2017.

Sticking to your guns through difficult periods is a quality that marks out many of the top investors.

We have looked at 10 of the biggest fund turnaround stories in the UK All Companies sector in 2017. In 2016, the managers of the funds posted an average return of 0.88%, which increased to 27.3% in 2017. The sector average was a more steady 10.62% in 2016 and 12.64% in 2017. This compares to a return of 16.8% and 13% respectively in the FTSE All Share

A combination of the growth to value switch, the impact of Brexit and certain stock specific issues were the key issues for most in 2016, they all enjoyed double digit bounce-backs last year.

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Sticking to your guns through difficult periods is a quality that marks out many of the top investors.

We have looked at 10 of the biggest fund turnaround stories in the UK All Companies sector in 2017. In 2016, the managers of the funds posted an average return of 0.88%, which increased to 27.3% in 2017. The sector average was a more steady 10.62% in 2016 and 12.64% in 2017. This compares to a return of 16.8% and 13% respectively in the FTSE All Share

A combination of the growth to value switch, the impact of Brexit and certain stock specific issues were the key issues for most in 2016, they all enjoyed double digit bounce-backs last year.

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Mark Slater

The biggest return to form came from Mark Slater, who in 2016 posted a 3.1% loss, which he managed to turn in a 27.2% gain in 2017.

His fund suffered a disappointing return in 2016 in part due to the fallout from the UK’s decision to leave the EU.

At the time Citywire A-rated Slater said that the market’s reaction to the referendum was ‘completely irrational’ and ‘defied logic’.

His words seemed prophetic as markets globally, including the UK, were able to shrug off the uncertainty brought on by the Brexit decision and Donald Trump’s election later that year.

Slater’s biggest winner in 2017 was Hutchinson China MediTech, a Chinese company listed in London, which saw its shares rise 147% over the calendar year, on the back of successful phase II clinical results for one of its cancer treatments.

The company contributed to 10.3% of the funds overall performance in 2017.

Other major contributors to the fund include First Derivatives and Restore, which contributed 4.26% and 2.29%, respectively.

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Abby Glennie
The next biggest turnaround story in 2017 was a relative newcomer to fund management, Abby Glennie, who took on the Standard Life UK Opportunities fund at the start of 2016.

Losses in the first half of 2016 meant that the year only managed to return 1.9%. She
put this down to changes she needed to make on the fund after she took the reins.

Fast forward one year and rising star Glennie sits second in terms performance in the sector, returning 31% to investors for the calendar year 2017. 

Major contributors to Glennie’s performance in 2017 included Fever-Tree, which is the fund’s largest holding.

The company’s shares soared in the first half of the year, when it announced that it expected full-year sales and profits to be higher than previously estimated.

Fund administration company Sanne Group also boosted the fund’s performance after the business moved into profit, following a loss the year before. Another positive contributor was JD Sports, the sports and ‘athleisure’ clothing retailer.

Its shares leapt after it bought outdoor pursuits company Go Outdoors.

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Margaret Lawson and Colin McLean
If Glennie is a relative newbie to the industry, then Citywire-A rated Margaret Lawson (pictured) and + rated Colin McLean are stalwarts.

The SVM Growth fund they have co-managed since it launched in 2008, had a torrid time in 2016, when it lost investors 3.6%.

The funds’ performance like many other turnarounds in the UK All Companies sector was tied with the market volatility following the EU referendum.

However, the fund which can have a volatile return profile at times, delivered 23.7% returns, compared with the FTSE All Share index’s rise of 13.1%.

Major contributors to performance in 2017 include Johnson Service Group, the fund’s largest holding, as well as JD Sports, Burford Capital and GVC Holdings.

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Wesley McCoy

It was ‘return of the Mac’ in more ways than one for Standard Life’s Wesley McCoy, the second fund manager from the firm to appear on 2017’s UK All Companies top turnaround list.

He was reinstated as manager of the Standard Life Equity Unconstrained fund in 2015, following the exit of former manager Edward Legget (also featured on this list).

McCoy had originally managed the fund until he left Standard Life Investments in 2008 to focus on charity work in Africa.

The fund wobbled slightly on his comeback, making losses in three out of the first four quarters he was at the helm. As a consequence, he closed off the calendar year 2016 with a 3.1% loss.

However, McCoy brought the fund back on track delivering investors a 23.4% gain in 2017.

Major contributors to performance include NMC Health which saw share price outperformance, following the announcement of two accretive deals in Saudi and UAE healthcare companies.

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Henry Dixon and Jack Barrat
Citywire AA-rated duo Henry Dixon (pictured) and Jack Barrat are very rarely not featured in the top 10 list in terms of performance, but market volatility in 2016 saw the star fund managers tumble down the league table.

The fund returned 5% in 2016, compared with the 30.3% it delivered in 2017.

The cause of the lag in performance in 2016 was partly because of difficult conditions for value investors in the early part of the year, as the market continued to focus on ‘overvalued’ quality growth, according to the pair.

Major contributors to performance last year included LSL, the residential property services company, which rose sharply in response to posting favourable results.

Other major contributors include Intermediate Capital and Polar Capital, which both outperformed the market.

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Lesley Duncan
Standard Life Investment’s UK Ethical fund had a difficult year in 2016 due to a combination of market volatility as well as stock specific issues, such as a position in BT.

However, thanks to a weaker pound helping overseas earners and the general recovery in UK markets, the fund returned to profit in 2017, netting investors 24%.

Its manager, Citywire A-rated Lesley Duncan, is the third manager from Standard Life Investments (now Aberdeen Standard Investment's to get on the comeback trail last year.

Major contributors to the fund’s return to profit also included NMC Healthcare and Fever-Tree, which are the two largest holdings in the fund.

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Edward Legget
After leaving Standard Life Investments in 2015, Edward Legget moved to Artemis, where he was made manager of its UK Select fund.

Running the high conviction ‘best ideas’ fund had started out badly for Citywire + rated Legget, with the fund making a 16% loss in the first six months he was in charge.

The performance was bad enough that Legget apologised to investors, admitting that the fund had been ‘badly caught out by Brexit’.

However, Legget managed to turn around the fund’s fortunes, clawing back losses to return 1.6% for the full year 2016 and then 20.4% in 2017.

Major contributors to the fund’s return to form came from positions in Fenner and Ryanair.

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Philip Harris
Phillip Harris, who runs EdenTree’s UK Equity Income Growth fund, is another manager who has only recently taken command.

Harris took over the fund in tail end of 2015. The volatility caused by the UK’s Brexit decision made 2016 a difficult year for the fund’s new chief, seeing it return only 1.6% during the year.

However, the market turned, with the fund’s success in 2017 due to its ‘significant’ exposure to small and medium companies that have large overseas earnings, Harris said in a recent trading update.

The largest positive contributor to the fund was made by that fund manager favourite Fever-Tree due to its continuing strong trading and material earnings upgrades. Other winners included Blue Prism Group, which outperformed due to high growth concept software exciting investors, while a position in Gamma proved fruitful after it bounced following acquisitions.

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Chris Wright
The Premier Ethical fund, managed by Citywire A-rated Chris Wright, is the second ethical fund to feature on this list.

The fund has never had a year of negative returns since its inception. However, it posted lacklustre returns of 4% in 2016, compared to the FTSE All share index which rose 16.8%.

Its turnaround was helped by a weaker pound following the UK decision to leave the EU and the recovery in the UK financial sector, which represents 28.2% of the portfolio.

Major contributors to performance include HSBC, Legal & General and Prudential.

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Citywire view

Frank Talbot, head of investment research 

A lot of the names on this list are high conviction investors with large exposure to select parts of the FTSE. This goes a long way towards explaining why they have had such wildly different performance between years. As always though returns like this should always be viewed in the context of more than just a few extreme years.

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Related Fund Managers

Chris Wright
Chris Wright
61/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 29.61%
Philip Harris
Philip Harris
21/189 in Equity - UK (All Companies) (Performance over 1 year) Average Total Return: 13.69%
Edward Legget
Edward Legget
113/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 20.54%
Lesley Duncan
Lesley Duncan
42/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 32.10%
Jack Barrat
Jack Barrat
17/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 39.73%
Henry Dixon
Henry Dixon
16/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 39.73%
Wesley McCoy
Wesley McCoy
148/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 13.97%
Margaret Lawson
Margaret Lawson
33/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 34.69%
Abby Glennie
Abby Glennie
5/189 in Equity - UK (All Companies) (Performance over 1 year) Average Total Return: 17.99%
Mark Slater
Mark Slater
7/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 44.12%
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