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The UK equity managers on top in 2018

The UK equity managers on top in 2018

Brexit fears and stuttering performance have seen money pour out of the UK all companies sector, but despite the headwinds, a number of managers have delivered solid returns in the first half of the year.

Some £9.1 billion has been withdrawn from London-domiciled UK equity funds in the two years since Brexit, with £1.2 billion redeemed in May alone, according to Investment Association stats. 

Although it has recouped the losses of a punishing first quarter, the FTSE 100 has still had an underwhelming six months in 2018 overall, rising a measly 1.4%.

However, managers have been able to navigate through the turbulence, with the average fund up a market-beating 2.6% and plenty have topped this, with one fund even achieving double digit performance.

The top performing fund over this period was the £367 million Baillie Gifford UK Equity Alpha, managed by Citywire A-rated Gerard Callahan.

The fund has been a consistent outperformer and is up 47% over the last three years, compared to the FTSE All Share’s 31.6%. That has continued in 2018, with the fund up 10.5% having benefited from all five of its biggest holdings, which comprise 27.1% of the portfolio, strongly outperforming the index.

Ocada, now Callahan’s fourth largest position at 4.5%, has seen its share price rise by a staggering 160.6% year-to-date, after the company signed a shock distribution deal with US supermarket giant Kroger.

While less spectacular, his other biggest bets have also paid off, with the fund’s biggest holding, Rightmove at 7.3% of the fund, up 12.6%. The other three stocks in his top five are Hargreaves Lansdown, Renishaw and Homeserve, which have gained 12.6%, 5.3% and 14.2%, respectively.

The other winners

The Liontrust Special Situations fund at £3.7 billion is by far the largest of the top 10 performers in the first half of the year.

Managed by AAA-rated pair Anthony Cross (pictured) and Julian Fosh, it has long been a favourite for investors, owing to its track record of consistent outperformance. This has continued in 2018, with the fund up 6.6%.

Contributing to their strong start to the year were top 10 holdings in oil majors BP and Royal Dutch Shell, which outperformed the market on oil price strength, rising 13.2% and 10.3%, respectively.

By far the youngest fund in the top 10 is the £41.7 million VT UK Strategic Value, which has a two year track record.

Managed by former Wealth Manager cover star and Tcam chief investment officer Haig Bathgate, it has returned 7% since the start of the year.

The 10 best performing UK equity funds in the first half of 2018 Source: Lipper

  6 month 1 year 3 years
Baillie Gifford UK Equity Alpha 10.50% 24.30% 47%
Majedie UK Focus 9.10% 12.40% 29.90%
Unicorn Outstanding British Companies 8.30% 11.70% 30.50%
Schroder Responsible Value UK Equity 8.20% 14.10% 35.80%
TB Saracen UK Alpha 8% 18.20% 34%
BlackRock UK 7.80% 16.40% 40.80%
Legal & General Growth 7.40% 12.70% 47.90%
Premier UK Growth 7.20% 12.60% 26.90%
VT UK Strategic Value Net Income 7% 15.51% NA
Liontrust Special Situations 6.60% 14.20% 47.10%
Sector averages 2.60% 8.50% 27.20%
FTSE All share 1.70% 9.00% 31.60%

 
New manager rebound
Moving on from new funds to new managers, the Premier UK Growth fund, which is now run by Jon Hudson and Benji Dawes after its previous manager Chris White stepped down in November 2017, has also had stellar returns year-to-date.

The fund is up 7.2% over the six months to the end of June, with the pair having benefited from their holding in Royal Dutch Shell, the fund’s largest position at 4.86%, with other drivers including top 10 name Gym Group, rising 28.6%.

BlackRock’s UK equity team has also seen a number of high profile changes in recent months. However, that has not stopped its UK fund from making strong returns.

The £563 million fund, now managed by Nick Little, gained 7.85% during the six months to the end of June.

Interestingly, one of the fund’s largest holdings, a 4.04% portfolio position, is in US streaming website Netflix. Although unexpected for a mainstream UK equity mandate, it has served Little well, gaining a massive 106.2% in the first half of the year.

Elsewhere, Legal & General Investment Management’s Growth Trust is continuing to deliver, up 7.38%

Its manager, A-rated Gavin Launder has logged some of the most consistent results in the sector, beating the peer group in 53 of the past 60 months, helped by a large holding in Ocado.

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Haig Bathgate
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17/76 in Mixed Assets - Conservative GBP (Performance over 3 years) Average Total Return: 17.61%
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2/165 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 62.12%
Julian Fosh
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14/165 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 40.7%
Anthony Cross
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13/165 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 40.7%
Chris White
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70/91 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 18.25%
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