MI Discretionary Trust

A focused, value style UK equity fund with a significant bias to small cap stocks.

  • 2510.48p
    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.

  • 9853.37p
    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!

  • 1.00%
    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).

  • 1.12%
    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.

  • 1.20%
    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 13 December 2019, fund data last updated 15 December 2011

This fund aims to provide maximum appreciation with above average yield for a growth fund through concentration in UK smaller and medium sized companies. It has a significant bias to small caps. The manager invests in a concentrated portfolio and believes in running his winners. Portfolio turnover is low. This essentially mirrors the Rights & Issues Investment Trust, run by the same manager.

Fund summary

Sector UK Smaller Companies
Structure UNIT TRUST
Launched August, 1963
Size £45m
Yield 1.20%
Charging basis
Dividends paid Jun, Dec

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 3.38%
Annual management charge 1.00%
Ongoing charges figure 1.12%

Allocation

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Investment process

The fund is built entirely around bottom up stock analysis with an emphasis on fundamental value. The manager does not rely on third parties to generate investment ideas or provide research and analysis. Instead he relies on his extensive market experience and he alone will undertake all analysis and company visits. He does not invest in what are perceived as 'bad' companies even if they are cheaply priced. Instead he will target those which he understands, are profitable and whose businesses have significant barriers to entry. The manager will rely on balance sheet and turnover versus margin analysis to identify value. He pursues a buy and hold strategy and will not take positions in a company that cannot satisfy an investment case over a three to four year view. This is particularly important in the small cap arena where transaction costs can be high.

It's rare to find a manager who has managed the same fund for as long as Simon Knott has. In fact he has managed the Discretionary Fund in his own distinctive style since 1990. In what can only be described as a purist approach, the manager's style provides investors access to a focused, highly researched, deep value (cheap stocks relative to net assets or growth potential) portfolio of mostly small cap stocks. Knott’s investment philosophy and his detailed knowledge of the companies in which he invests is impressive. The Manager's distinctive bottom up approach, seeking out fundamental value, has proved successful over all economic cycles.

Manager research

Average monthly relative returns

  • 14/15 0.00%
  • 15/16 0.00%
  • 16/17 0.00%
  • 17/18 0.74%
  • 18/19 -0.13%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.30%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.00%

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

Melwin Mehta

Track record

The track record of Melwin Mehta in managing mutual funds in this sector is still too short for us to draw any meaningful conclusions and so our assessment is based largely on qualitative aspects.

Periods of worst performance

Absolute -16.00% (July 2018 - December 2018)
Relative -5.00% (May 2019 - 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.

Allocation

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Top 10 holdings

Data accurate as at 30 August 2019

8.6752% Simplybiz Group Plc (The)
7.3924% Churchill China
4.9629% Merlin Entertainments Plc
4.8509% Macfarlane Group
4.802% Dewhurst
4.1337% Vp
4.0581% Treatt
3.9406% Ab Dynamics Plc
3.8021% Hill & Smith Hldgs
3.5978%4 imprint Group Plc
Source: Trustnet

Sector breakdown

Support Services 22.00%
Financial Services 20.00%
Household Goods 11.00%
Net Current Assets 10.00%
Chemicals 9.00%
Industrials 9.00%
Building & Construction 6.00%
Electronic & Electrical Equipment 5.00%
General Industrials 5.00%
Transport 1.00%

Portfolio

Focused portfolio of c.40 stocks. Historically c.90% of the portfolio has been invested in small caps of which 15% are AIM stocks. The portfolio is characterised by low turnover, low valuations and lower market correlation than average.

Constraints

There are no formal portfolio constraints. The top 10 stocks will typically account for up to 50% of portfolio and the top 20 for 75%.

Key Investor Information - Income

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Key Investor Information - Accumulation

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