Majedie UK Equity - a different way to invest in the UK
Dominic Rowles | Mon 24 June 2019
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- We think this fund offers a different way to invest in the UK
- The managers have found plenty of opportunities in UK-focused companies, such as retail banks
- A focus on cheaper companies held back recent returns over the past few years as they've gone overlooked by others
Our view
We think the UK's home to one of the world's most unloved stock markets. Brexit and political uncertainty has put many investors off investing here. But the managers of the Majedie UK Equity Fund think the UK's full of opportunities just waiting to be uncovered.
It's different from other funds in the UK All Companies sector because it's managed by three experienced investors. Each has their own strengths, styles and areas of focus. There's been some change in the fund manager line-up over the past year, but we're encouraged by the key members of the team remaining in place.
They're incentivised to perform well too. They invest their own money in the fund and own shares in the business they work for.
Over the long term, we feel their approach has the potential to deliver strong returns for investors, although there are no guarantees. The fund continues to feature on the Wealth 50 list of our favourite funds in the major sectors.
How's the fund performed?
The fund's done well over the long run. An investment of £10,000 made at launch in July 2003 would now be worth £47,891*. The broader UK stock market would've returned £34,619.
Performance has been weaker in more recent years though. The managers have tended to focus on companies whose share prices they believe don’t reflect their true worth. These companies largely remained out of favour with other investors, which held back returns. The fund's investments in higher-risk smaller companies also dragged on performance.
Past performance isn’t a guide to the future. All funds will fall and rise in value and you could get back less than you invest.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| May 2014 -
May 2015 |
May 2015 -
May 2016 |
May 2016 -
May 2017 |
May 2017 -
May 2018 |
May 2018 -
May 2019 | |
| Majedie UK Equity | 9.1% | -9.1% | 25.9% | 4.5% | -9.4% |
| FTSE All-Share | 7.5% | -6.3% | 24.5% | 6.5% | -3.2% |
Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2019
Retailer Sainsbury's was one of the fund's worst performers over the past year. Its share price fell heavily after a proposed merger with competitor Asda was blocked by the Competition and Markets Authority. Energy company Centrica also performed poorly amid falling gas prices, warmer weather and the introduction of tariff caps.
Stronger performers included the fund's overseas investments like pharmaceuticals company Novartis and Dutch telecoms business KPN. The fund also benefited from a lack of investments in Tobacco companies, which performed poorly.
Managers' outlook
Negativity towards the UK has impacted the share prices of companies that are sensitive to the health of the economy. The managers have added to investments which have the potential to benefit when sentiment improves, including Lloyds Banking Group, Royal Bank of Scotland and Travis Perkins, the building materials provider.
They're also positive on the prospects for food retailers. Sales growth has improved amongst the 'big four' retailers and they're beginning to close the gap to discount retailers like Aldi and Lidl. The fund's investments in Sainsbury's, Tesco and Morrison's all have new management teams with ambitious plans to turn the companies around with better pricing, product ranges and service.