You are here: Home - Investing - Experienced Investor - News -

One to Watch: R&M UK Equity Income

0
Written by:
08/09/2014
FE Research casts an eye across the investment universe to find lesser-known funds for your portfolios
One to Watch: R&M UK Equity Income

FE Alpha Manager Daniel Hanbury took over the R&M UK Equity Income fund in June last year. It has a multi-cap focus, investing in small, mid and large caps. 

Hanbury is traditionally viewed as a small-cap manager, who made his name running the R&M UK Equity Smaller Companies fund and the Investec Smaller Companies fund before that.

We are confident he has the skills and experience to be a leading light in the highly competitive UK Equity Income sector, given his proven ability to back more winners than losers.

Track record

R&M has a complicated in-house screen called ‘MoneyPenny’ which it uses to find candidate stocks for its funds. 

These fall into four different buckets: quality, growth, recovery, and asset-backed. Hanbury looks for growth potential, attractive valuations and also uses technical analysis to time entry and exit points from positions. 

The fund has done well since launch in 2009 in a period of rising markets, helped by weightings to the smaller end of the market. 

The only blemish on the fund’s record was in 2011, when it lost almost 7%, compared to a loss of 2.9% from the average UK equity income fund.

Hanbury says he expects the fund to do better on the downside in the future, and has increased the weighting to large caps in the fund to around 66% from 60% in recent months.

He also has a sizeable weighting in cash, currently at around 8%, while small caps make up just 3% of the portfolio. Up to 15% of the fund can be invested in small caps at any one time.

guinness-global-energy-holdings-1Holdings

The manager typically holds between 70 and 90 stocks, but has a tendency to have significant weightings in a handful of his favourite ideas. 

Shell and BP are currently Hanbury’s two biggest positions, making up 7.6% and 5.1%, respectively. All the fund’s top ten positions are FTSE 100 companies, with Diageo, Vodafone, and AstraZeneca all featured on the list. 

Capita, Direct Line Insurance, and African Barrick Gold were the top contributors to fund performance in July. 

At the sector level, the fund’s largest exposure is to the financials, consumer goods and consumer services sectors.

Hanbury attempts to deliver three percentage points more than the index over rolling five-year periods.

While it is early days, he has made a strong start. FE data shows he has returned 16.2 % since 1 July last year, compared to 13.7% from the fund’s FTSE All Share benchmark. R&M UK Smaller Companies is also ahead of its sector over the period, albeit marginally. 

The income fund has a modest yield of 3.2%, but dividend growth – with some capital appreciation – is the priority. 

FE Research analyst verdict

“We have recently added R&M UK Equity Income to the FE Select 100 recommended list of funds. We like his combination of quantitative and qualitative analysis, which has served investors well over the years. While he has only run this fund for a short while, we are confident his style will transfer well to a fund with a larger-cap focus.”

KEY POINTS

Fund size: £214m

Manager: Daniel Hanbury (pictured)

FE Alpha Manager Rated: Yes

FE Crowns: Four

Sector: IMA UK Equity Income

rmequityfund-tables-v2-0809

Volatility

Name 6m%  1yr% 
R&M UK Equity Income  4.14  8.82 
IMA UK Equity Income  5.67  8.36


Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Sterling tumbles as Scottish ‘yes’ vote takes shock lead

Sterling tumbled in overnight trading and was poised for further losses today after the latest poll showed Scotland is on...

Close