Merian UK Mid Cap A

UK equity fund investing principally in stocks from the FTSE 250 index.

  • 375.60p
    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.

  • 427.30p
    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?

  • 4.00% 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!

  • 1.60%
    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).

  • 1.60%
    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.

  • 0.50%
    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 21 September 2020, fund data last updated 17 December 2015

The fund targets capital growth from a portfolio of medium-sized UK equities. Manager Richard Watts uses a combination of top down and bottom up research to find what he believes to be under-researched, and therefore mis-priced, companies, principally from the FTSE 250 index. Stock selection usually highlights above-average earnings growth, revisions in earnings or potential for re-rating, and the overall portfolio typically has a bias to growth stocks.

Fund summary

Sector UK All Companies
Structure OEIC
Launched February, 2002
Size £2,712m
Yield 0.50%
Charging basis Income
Dividends paid 30 Sep

Charges

Standard initial charge 4.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.60%
Ongoing charges figure 1.60%

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Investment process

The fund seeks capital growth from investment primarily in medium sized UK companies. The managers believe these are less well researched than large companies, creating price inefficiencies which they aim to exploit using a combination of top-down and bottom-up analysis. The managers use a range of economic indicators to guide the overall portfolio balance. The managers believe no one style works consistently so both growth and value stocks will be held, dependant on the state of the economic cycle. The bottom-up analysis focuses on stocks with at least one of the following attributes: (i) Consistently superior earnings growth; (ii) Likelihood of positive earnings revisions; (iii) Potential for a re-rating. In identifying these, stocks are initially put through a valuation filter before qualitative issues are considered such as market positioning, economic sensitivity, management quality and financial stability.

Whilst we still view Old Mutual's small / mid-cap team in high regard, its assets under management are high which may make it difficult for the fund to recapture its past success. The portfolio's concentration contributes to its relatively high volatility compared to the benchmark.

Manager research

Average monthly relative returns

  • 15/16 0.37%
  • 16/17 1.23%
  • 17/18 -0.25%
  • 18/19 -0.63%
  • 19/20 1.02%

Bestinvest MRI

  • 3 years 0.05%
  • 5 years 0.35%
  • Career 0.19%
  • 3 years 60.60%
  • 5 years 91.30%
  • Career 96.00%

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

Richard Watts

Watts joined Old Mutual's UK Mid & Small Cap team as an analyst in 2002, becoming deputy manager of the UK Mid Cap fund in 2006 and taking over as lead manager at the end of 2008. Prior to joining Old Mutual he was a senior associate in the investment management division of Pricewaterhouse Coopers before spending two years at Orbis Investment as an equity analyst. Watts graduated from Oxford University with a degree in mathematical sciences in 1998, is a CFA Charterholder and an Associate of the UK Society of Investment Professionals.

Track record

Richard Watts has 11.7 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.19%. During the worst period of relative performance (from January 2009 - August 2010) there was a decline of 14% relative to the index. The worst absolute loss has been 35%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 96%.

Periods of worst performance

Absolute -35.00% (May 2018 - March 2020)
Relative -14.00% (January 2009 - August 2010)

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 July 2020

8.6% Boohoo Group Plc
4.8% Ascential Plc
4.6% Asos Plc
4.2% Homeserve
4% The Hut Group
3.4% Onesavings Bank Plc
3.3% Trainline Plc
3.3% Pets At Home Group Plc
3.3% Ashtead Group
3.2% Wizz Air Hldgs Plc
Source: Trustnet

Sector breakdown

Consumer Services 42.00%
Financials 24.00%
Industrials 13.00%
Consumer Goods 7.00%
Unquoted Investments 6.00%
Technology 4.00%
Basic Materials 2.00%
Money Market 2.00%
Telecommunications 1.00%
Utilities 1.00%

Portfolio

The portfolio currently holds 45 stocks with typical position sizes ranging from 5% (core stocks) to 1% (higher risk stocks).

Constraints

There are no sector constraints. Max individual holding 5%. At least 80% of the portfolio must be from the FTSE Mid 250.

Key Investor Information - Income

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Key Investor Information - Accumulation

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