Merian UK Alpha U2

An unconstrained, focused portfolio, investing across FTSE 350 stocks.

  • 83.02p
    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.

  • 102.50p
    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!

  • 0.70%
    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).

  • 0.70%
    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.

  • 4.70%
    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 30 March 2020, fund data last updated 30 October 2015

The fund’s objective is capital growth by investing predominantly in listed UK equities from the FTSE 100 and FTSE 250 indices. Manager Richard Buxton has structured the fund to address a market environment where broad market advances might be difficult to achieve, and consequently selects a concentrated portfolio of stocks without any benchmark constraints. The bulk of performance is expected to be generated through bottom-up stock selection, though sector and thematic allocation will also affect the balance of the portfolio.

Fund summary

Sector UK All Companies
Structure UNIT TRUST
Launched October, 2013
Size £1,728m
Yield 4.70%
Charging basis Capital
Dividends paid May, Nov

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.70%
Ongoing charges figure 0.70%

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Investment process

The fund invests in a concentrated portfolio of large and mid-cap UK equities. The manager believes investors are too focused on short-term company news and economic indicators, and fail to properly consider companies’ long-term prospects. He targets companies with strong business models, healthy balance sheets and unrecognised potential. His investment style is pragmatic, so unrecognised potential can include turnaround situations, deep value stocks and more expensive growth stories where he believes they can maintain performance. New ideas can be prompted by factors including: absolute and relative valuations, persistent share price weakness, poor results, new management teams or changes in economic prospects. Stock research includes both quantitative and qualitative work. The former includes analysis of a company’s historical results and its competitive position using Porter’s Five Forces. The latter includes management track record, governance and incentive arrangements. Bottom-up research is complemented by the team’s thematic views. These will never solely dictate investment decisions - stocks must be supported by strong fundamentals in their own right. Portfolio turnover tends to be very low.

Richard Buxton is one of the few UK fund managers to have achieved success whilst investing predominantly in the FTSE 100, a notoriously hard area of the market to beat. He has outperformed over a long career at both Old Mutual and previous employers Schroders and Barings. He typically does better in rising markets and performance can be volatile. This has led critics to label him a bull market investor, an accusation we consider unfair given his pragmatic approach. We would argue periods of underperformance are generally more event specific than style driven.

Manager research

Average monthly relative returns

  • 15/16 -0.41%
  • 16/17 -0.23%
  • 17/18 0.20%
  • 18/19 -0.16%
  • 19/20 -0.09%

Bestinvest MRI

  • 3 years -0.02%
  • 5 years -0.14%
  • Career 0.15%
  • 3 years 65.20%
  • 5 years 32.30%
  • Career 99.00%

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

Richard Buxton

Buxton joined Old Mutual in June 2013 as head of UK equities and became chief executive in July 2015. He has a degree in English from Oxford University and began his investment career in 1985 with Brown Shipley Asset Management as a fixed income and equity investment manager. He moved to GRE Asset Management in 1989 as a UK equity manager. In 1990 he joined Baring Asset Management as a UK equity manager. He moved to Schroders in September 2001 to run the specialist UK equity team and became its head of UK equities in 2003.

Track record

Richard Buxton has 23.4 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.15%. During the worst period of relative performance (from July 2007 - January 2009) there was a decline of 20% relative to the index. The worst absolute loss has been 51%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 99%.

Periods of worst performance

Absolute -51.00% (October 2007 - February 2009)
Relative -20.00% (July 2007 - January 2009)

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.

Allocation

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Top 10 holdings

Data accurate as at 31 January 2020

4.8% Glaxosmithkline
4.4% Gvc Hldgs Plc
4.3% Fidelity National Info Services Inc
4.3% Tesco
3.9% Bp
3.8% Astrazeneca Plc
3.8% Sage Group
3.7% Hsbc Hldgs
3.7% Lloyds Banking Group Plc
3.6% Ssp Group Plc
Source: Trustnet

Sector breakdown

Financials 20.00%
Consumer Discretionary 19.00%
Health Care 12.00%
Materials 11.00%
Industrials 10.00%
Information Technology 9.00%
Energy 7.00%
Consumer Staples 6.00%
Utilities 2.00%
Communications 2.00%

Portfolio

30-40 stocks. The majority of stocks are in the FTSE 100 (70-75%) with the balance in the FTSE 250.

Constraints

Typical max 5% in one stock. Up to 20% in cash.

Key Investor Information - Income

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Key Investor Information - Accumulation

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