M&G Recovery A

Strong value, smaller stock bias and manager takes long term views.

  • 120.15p Price (Inc)
  • 293.63p Price (Acc)
  • 4.00% 0.00% Initial charge
  • 1.50% Annual management charge
  • 1.65% Ongoing charges
  • 3.20% Yield

Prices as at 10 December 2019, fund data last updated 21 December 2015

The fund targets capital growth from investment in UK equities. Manager Tom Dobell takes a contrarian approach, looking for companies which are out of favour, in difficulty, or whose future prospects are unrecognised by the market provided the problems are deemed solvable. He typically holds stocks for a number of years, often building relationships with the boards, then sells when the company has regained stability. The portfolio includes businesses of all sizes, with typically around half in mid and small cap stocks and half in the FTSE 100.

Fund summary

Sector UK All Companies
Structure OEIC
Launched May, 1969
Size £2,098m
Yield 3.20%
Charging basis Income
Dividends paid 28 Feb, 31 Aug

Charges

Standard initial charge 4.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.50%
Ongoing charges figure 1.65%

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Investment process

The fund invests primarily in UK equities of all sizes, including those on the AiM market. Some overseas companies will also be included, though these are primarily London listed and Dobell prefers those with English-speaking management. He targets companies in operational or financial difficulty, those with new management, restructuring stories or those that are simply out of favour with the stockmarket. Ideas are identified through company meetings and visits as well as internal and external research. In valuing businesses the manager considers standardised metrics, but even these are often of less relevance as he often buys loss-making companies. He places greater emphasis on building relationships with company management, sometimes in conjunction with M&G’s in-house corporate finance team, and gaining an in-depth understanding of the business. Dobell cites a three-stage process from 'Unloved', to 'Stabilising' and to 'Recovering well', looking to invest at the initial stage through to recovery in a 3-5 year horizon.

This was once one of the top funds in the sector but performance has suffered in recent years. We first downgraded it in May 2012, following which the fund continued to suffer from poor stock selection and sector allocation. We believed investors' patience in expectation of a turnaround had been tested long enough and further downgraded the fund to a 1 star sell in September 2014.

Manager research

Average monthly relative returns

  • 14/15 -0.44%
  • 15/16 -0.50%
  • 16/17 0.22%
  • 17/18 0.03%
  • 18/19 -1.05%

Bestinvest MRI

  • 3 years -0.27%
  • 5 years -0.35%
  • Career 0.04%
  • 3 years 26.80%
  • 5 years 12.70%
  • Career 91.60%

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

Tom Dobell

Dobell is an investment manager in M&G’s UK Equity team. He joined M&G in 1992, having previously worked for Phillips & Drew (PDFM) with responsibility for their charity and small pension fund division. He graduated from Agricultural college in 1986.

Track record

Tom Dobell has 19.6 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.04%. During the worst period of relative performance (from February 2012 - September 2019) there was a decline of 34% relative to the index. The worst absolute loss has been 37%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 92%.

Periods of worst performance

Absolute -37.00% (October 2007 - February 2009)
Relative -34.00% (February 2012 - September 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

8.3% Bp
7.1% Hsbc Hldgs
4.7% Gw Pharmaceuticals
3.8% Iwg Plc
3.3% Ei Group Plc
3.3% Oxford Biomedica Plc
3.1% Tullow Oil Plc
3.1% Lloyds Banking Group Plc
3% Crh
2.9% Entertainment One Ltd
Source: Trustnet

Sector breakdown

Industrials 23.00%
Financials 16.00%
Health Care 14.00%
Consumer Services 14.00%
Oil & Gas 13.00%
Basic Materials 11.00%
Utilities 2.00%
Technology 2.00%
Consumer Goods 2.00%
Telecommunications 2.00%

Portfolio

Around 100 stocks. Typically around 50% by value in the FTSE 100.

Constraints

The portfolio must hold at least 40% of its assets within the FTSE 100

Key Investor Information - Income

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Key Investor Information - Accumulation

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