Ardevora UK Income C

Large and mid-cap UK equity fund with a process based on investor psychology.

  • 123.14p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 115.36p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.85%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 2.40%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 01 July 2020, fund data last updated 28 September 2015

The fund aims to achieve long term capital growth with a bias towards income. To achieve this managers Jeremy Lang and William Pattisson invest primarily in large and mid cap UK equities with a bias to the latter. The duo follow a process based on investor psychology, looking for stocks suffering from unwarranted investor anxiety or analyst bias, and avoiding those where they believe company management is engaging in excessive risk-taking.

Fund summary

Sector UK Equity Income
Structure OFFSHORE FUND
Launched July, 2011
Size £9m
Yield 2.40%
Charging basis Capital
Dividends paid 14 Jan, 14 Dec

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.85%

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Investment process

Starting with a universe of the entire UK equity market, the managers initially seek to avoid risk by stripping out: illiquid stocks, companies with unclear accounts, and those with excessively risk-taking managements - this reduces the investable universe to around 120 stocks. They then screen for: - Investor bias. They look for value stocks, defined as the cheapest 40 stocks as measured by cash flow from operations to enterprise value. - Analyst bias. They look for 40 growth stocks, defined as those with unusual positive moves in forecasts. This indicates the analysts are struggling to understand the company. Then take a more detailed, subjective look at: - Management risk, favouring companies behaving in an atypically low risk way. This could be either because a company has changed and management is behaving in a low risk way, or because it is in a benign environment and can still make attractive returns. - Investor bias, often looking at poor performers where investors are skewed by anchoring events (e.g. profit warnings) that are no longer relevant to valuation. - Analyst bias, looking for systematic upward skews in forecast errors, as well as businesses that are undergoing change or are unusual - in both cases these are prone to forecast errors.

Lang achieved a strong track record in the UK Equity Income sector at his previous employer Liontrust, albeit his returns were inconsistent. Since leaving in 2009 to set up Ardevora he has revamped the process and initial results have been impressive, if volatile. Lang sets himself apart from peers with a process that eschews meeting company management, effectively trying to strip emotion out of his investment decisions and capitalise on the mistakes of others.

Manager research

Average monthly relative returns

  • 15/16 0.08%
  • 16/17 -1.06%
  • 17/18 -0.31%
  • 18/19 -0.27%
  • 19/20 -0.31%

Bestinvest MRI

  • 3 years -0.30%
  • 5 years -0.37%
  • Career 0.05%
  • 3 years 12.30%
  • 5 years 4.90%
  • Career 79.70%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Jeremy Lang / William Pattisson

Lang graduated with a 1st in Economics from York University (1985), then gained a Masters in ‘The Economics of Finance and Investment’ at Exeter University. He joined James Capel in 1986 where he specialised in Northern and Latin American equities for five years. He then took a sabbatical for four years, joining Liontrust on his return in 1996. Pattison joined James Capel in 1986 where he managed North American and UK Equities. In 1994, he moved to Fleming Investment Management where he became Head of the UK Equity Specialist team before being appointed Head of UK Equities. In 1999, he joined Liontrust where he and Lang were responsible for all investment management operations and the management of UK equity portfolios. Pattison has an Honours Degree in Chemistry from Oxford University. Lang and Pattisson left Liontrust in April 2009 and formed Ardevora in 2010.

Track record

Jeremy Lang / William Pattisson has 9.1 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.05%. During the worst period of relative performance (from December 2015 - April 2020) there was a decline of 26% relative to the index. The worst absolute loss has been 27%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 80%.

Periods of worst performance

Absolute -27.00% (May 2018 - March 2020)
Relative -26.00% (December 2015 - April 2020)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Portfolio

40 stocks. The highest yielding third are double weighted and the lowest yielding third are half weighted.

Key Investor Information - Income

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Key Investor Information - Accumulation

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