Investec UK Total Return A

A focused FTSE 350 fund which uses a derivative overlay strategy designed to lower volatility.

  • 249.28p Price (Inc)
  • - Price (Acc)
  • 4.50% 0.00% Initial charge
  • 1.25% Annual management charge
  • 1.35% Ongoing charges
  • 1.20% Yield

Prices as at 06 December 2019, fund data last updated 30 March 2016

The fund aims to outperform the FTSE All-Share over a market cycle with lower levels of volatility by investing in a fairly concentrated portfolio of large and mid-cap UK equities. To achieve the volatility target, manager David Lynch applies a systematic hedging strategy, using FTSE 100 and 250 derivatives to control the fund’s level of exposure to the market. The level of market exposure will vary depending on overall market valuations – essentially it will be raised when equities are cheap and cut when they are expensive.

Fund summary

Sector Specialist
Structure OEIC
Launched July, 1999
Size £164m
Yield 1.20%
Charging basis Capital
Dividends paid Acc units only

Charges

Standard initial charge 4.50%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.25%
Ongoing charges figure 1.35%

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Investment process

The portfolio is built around best ideas taken primarily (at least 80%) from Alastair Mundy's Investec UK Special Situation Fund. As a result the underlying equities will conform to the Investec Value team’s long term contrarian approach to investing. Equity exposure can be hedged from 0 to 100% of the portfolio, with the size of the hedge determined with reference to stable, long-term fundamental valuation measures such as dividend yield, price to book and price to earnings. The instruments used will be FTSE 100 and 250 futures. The approach to hedge is dynamic and mechanistic - it is designed to be low when market valuation is cheap but rapidly increases as the market becomes expensive. Backtests undertaken by Investec indicate that the cost of hedging is typically between 0-5%, depending on the amount hedged and market volatility.

Under its former name, Investec Capital Accumulator, this fund invested in zero dividend preference shares. This universe became increasingly limited, so in 2014 the fund moved to a new process under a new portfolio manager. In view of this significant change to its operation we have downgraded the fund to a one star (switch) rating.

Manager research

Average monthly relative returns

  • 14/15 0.14%
  • 15/16 -0.92%
  • 16/17 0.88%
  • 17/18 -0.20%
  • 18/19 -0.64%

Bestinvest MRI

  • 3 years 0.01%
  • 5 years -0.15%
  • Career -0.20%
  • 3 years 57.10%
  • 5 years 39.40%
  • Career 31.90%

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

David Lynch

Lynch joined Investec Asset Management in 2004. Prior to this he was an investment analyst for Douglas Deakin Young, where he worked for three years. From 1999 to 2001 he spent two years working as an assistant portfolio manager at Marathon Asset Management. Lynch graduated from Trinity College Dublin in 1995 with a Master’s degree in Economics and Political Science. He holds the Securities Institute Diploma and is a CFA Charterholder.

Track record

David Lynch has 5.7 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.2%. During the worst period of relative performance (from February 2014 - August 2019) there was a decline of 17% relative to the index. The worst absolute loss has been 10%.

Periods of worst performance

Absolute -10.00% (April 2019 - August 2019)
Relative -17.00% (February 2014 - August 2019)

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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Top 10 holdings

Data accurate as at 31 August 2019

7.3% Capita Plc
6.2% Travis Perkins
4.9% Grafton Group
4.6% Glaxosmithkline
3.8% Sig
3.6% Citigroup Inc
3.2% Mccarthy & Stone Plc
3.1% Aggreko
3.1% Royal Bank Of Scotland Group Plc
2.9% Marks & Spencer Group
Source: Trustnet

Sector breakdown

Industrials 37.00%
Consumer Services 24.00%
Financials 24.00%
Consumer Goods 9.00%
Health Care 5.00%
Telecommunications 1.00%

Portfolio

30-50 stocks.

Constraints

Maximum position size 8%, typically 2-4%. Hedge can apply from 0-100% of the portfolio NAV.

Key Investor Information

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