Bestinvest says
We removed this fund from the buy list in May 2008 due to performance concerns. Whilst at the time the fund was partly a victim of its distinct 'value' (cheap out of favour companies) investment style, we also believe that stock specific issues also played a part. Note, whilst the fund should add value over the longer term, we are still of the view that there are better contrarian style funds on our recommended list.
The manager aims to add value to the portfolio by identifying stocks that are out of favour with the market, focusing primarily on FTSE 350 companies. The process is not deep value but rather contrarian in nature. Looking for poor sentiment, share price declines and the market being insensitive to forecast upgrades, are the main drivers behind the approach. Such companies will be trading on relative low earnings multiples (P/E's) relative to their industry multiples and often the market as a whole. However, the manager will spend a long time trying to understand prospective investments and thus is careful to avoid investing in companies with terminal operational problems.