Thomas Moore has been in charge of the Standard Life UK Equity Income Unconstrained Fund for six years and he has steered it successfully over that time – it has a four-star rating from our research team, which means it is a very high quality fund and one that we have a strong conviction in.
Moore also featured at number 24 in our countdown of Our Top 100 Fund Managers, where we called him one of the industry’s “rising stars.”
Although ‘megacap’ businesses often pay large dividends, they may not have attractive growth potential. Moore’s philosophy rests on the idea that long-term investors are served well by homing in on businesses that pay a reasonable dividend now, but have great scope to grow it further in the future. The fund has a higher weighting to mid-cap and smaller companies than its competitors, which gives the portfolio volatility, but Moore relies on his stock picking ability (as well as the ability of the 16-strong, highly-regarded UK equities team at Standard Life in Edinburgh) to forecast surprises in earnings ahead of market expectations.
Moore is confident about the fund’s outlook going forward. He believes that the consistency of the fund’s performance is due to Standard Life’s ‘Focus on Change’ investment process, along with his unconstrained approach. Standard Life says: “Unconstrained investing ultimately gives investment managers the freedom to express their highest conviction stock-level insights without having to consider potentially inhibiting benchmark constraints.”
Moore sees that as investors turn to defensive, large-cap dividend payers, depressing mid-caps, the current state of the UK market is providing opportunities to pick up a number of well-positioned, attractively valued companies which have potential for positive earnings and dividends. An example of a mid-cap company giving the portfolio ‘juice’ and sitting within Moore’s top 10 holdings is Britvic, the makers of Robinsons squash. Standard Life believes that Moore’s inclination towards domestic UK firms “continues to reap the benefits from a recovering economy with robust consumer spending and a strong labour market.”
Moore’s portfolio is likely to have a lower yield than its peers, because of his inclination to invest in companies offering more attractive capital growth. However, the fund can sit well alongside some of the prominent defensively-positioned funds in the sector, which may invest more in larger companies. And, for the investor with a longer timeframe, we feel the total return prospects (combined with a more interesting growth potential) make it a holding you can consider for your ISA or your SIPP.
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