Franklin UK Managers' Focus - a tough year
Dominic Rowles | Wed 17 July 2019
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- This fund has five experienced investors at the helm
- It's done well over the long term although performance has struggled over the past year
- The fund comprises a mix of UK-focused companies and overseas earners
Our view
The Franklin UK Managers' Focus Fund draws on the expertise of five experienced fund managers. Three have a specific focus on small, medium or large companies and one invests in companies of any size. Veteran investor Mark Hall oversees the fund and challenges the other managers on their ideas.
The number of investments each manager can add to the portfolio is restricted. This means only their best ideas make it in and the performance of each investment can have a significant impact on returns. This, combined with the fund's investments in smaller companies, adds risk.
We think this fund is a reasonable way to invest in the UK. However we currently prefer to back the team through another fund they run. That's why this one doesn’t currently feature on the Wealth 50 list of our favourite funds.
How's the fund performed?
The managers have delivered strong returns over the long term. We put this down to their ability to invest in companies with bright futures ahead of them, regardless of what size they are, or sector they're in. Past performance shouldn’t be seen as a guide to the future though. All funds can fall as well as rise in value and you could get back less than you invest.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Jun 14 -
Jun 15 |
Jun 15 -
Jun 16 |
Jun 16 -
Jun 17 |
Jun 17 -
Jun 18 |
Jun 18 -
Jun 19 |
|
| Franklin UK Managers' Focus | 16.7% | -5.5% | 23.8% | 10.5% | -5.8% |
| FTSE All-Share | 2.6% | 2.2% | 18.1% | 9.0% | 0.6% |
Past performance is not a guide to the future. Source: Lipper IM to 30/06/2019
The fund's performance wasn’t as strong over the past year. One of the worst performers was clothing retailer Superdry. The company's share price suffered after it announced profits wouldn’t be as high as investors' expected because of unusually warm weather. Julian Dunkerton, one of the company's founders, also regained his role as Chief Executive and many investors feared his design-led philosophy would harm the business. The managers sold their shares at the end of last year.
An investment in financial services company Just Group also did poorly when it scrapped its dividend and reported a full-year loss. The company's shares were later sold from the fund.
How's the fund invested?
Each manager is responsible for their own portion of the fund. But each investment is carefully considered by the whole team before changes are made.
The fund comprises a mix of companies that earn money in the UK, and UK companies that earn money overseas. Overseas earners proved popular with investors in recent years and generally performed well. But Brexit and political uncertainty has held back the fortunes of UK-focused companies.
The managers think many of these companies are so unloved by other investors that they look good value. 37% of the fund is invested in UK-focused companies including financial services companies St James's Place and Legal & General, and property companies Urban & Civic and Derwent London.
New investments include food producer Cranswick, a company the managers have held in high regard for a number of years. Its share price suffered recently as investors feared the company would struggle to grow earnings in such a competitive area. The managers don’t share these concerns though and took the opportunity to buy shares at lower cost.