Bestinvest says
Like other quant-based funds this has suffered in recent years, with the stock market patterns on which they benefit from coming unwound during the financial crisis. Management of the fund in 2010 was passed to Philip Wolstencroft, originator of the SmartGARP process - and as of yet the fund has not experienced a turnaround in performance.
The fund mainly invests in large cap UK stocks, but has the flexibility to invest outside the FTSE 100 and also in overseas companies (up to 20%). The investment process is based around a quantitative filter known as SmartGARP, also used on the Artemis European Growth and Global Growth funds. SmartGARP analyses stocks using over 100 data items split into seven factors the managers have identified as driving stock prices. At its core the fund looks for companies that are mispriced based on valuation and projected growth; another factor looks at quality of earnings. The process also includes earnings estimate revisions and macro-economic data to avoid stocks that are cheap for a reason. The final two factors, momentum and investor sentiment, aid in market timing - average holding period is around six months. Though the process is primarily quantitative, the manager authenticates the SmartGARP data using such factors as a company’s news flow and will also take account of diversification in forming the portfolio.