A brighter spot in the small stocks universe

The recent poor performance of stocks, caused in part by the uncertainty over the Greek debt crisis and volatility in China’s markets, means that many investors may be tempted to steer clear of them. But one equity fund that offers a “brighter spot” is the MFM Slater Growth Fund, writes Leonora Walters in the Investors Chronicle.

Run by Mark Slater, the son of investment guru Jim Slater, the fund’s performance speaks for itself. Over five years, it has been the third best-performer in the Investment Association UK All Companies sector and is among the top performers over one and three years, beating the FTSE All-Share and the FTSE 250. Overall, it has returned 20.1% over one year, 83.9% over three years and 151% over five years.

The fund’s remit is to achieve capital growth by investing in stocks with “superior growth potential”. Slater holds a portfolio of 25 to 50 UK stocks, but can also buy overseas shares (he currently holds Walt Disney). He uses the price/earnings to growth (PEG) ratio to value shares, while looking for strong brands, sustainable earnings, strong cash flow and director buying.

Around 70% of holdings are in smaller stocks, with 17% in support service firms and 15% in media companies. According to trustnet.com, Slater sees his biggest holding – Hutchison China Meditech – as the “leading drug development business in [China] bar none”, which offers exposure to Chinese healthcare but via the safety of a UK-quoted firm. Investors in a fund such as this need to be comfortable with volatile small stocks, but for those who are, it could be an interesting option. The ongoing charge is 1.56%.

Contact: 020-7220 9460

MFM Slater Growth fund chart

 

MFM Slater Growth Fund’s top ten holdings

MFM Slater Growth Fund’s top ten holdings
Holding % of assets
Hutchison China Meditech 7.58%
Walt Disney Holdings 4.35%
Bellway 3.61%
Regus 3.53%
Redcentric 3.24%
First Derivatives 3.12%
Restore 3.07%
Marston’s 3.06%
ITV 2.50%
Essentra 2.42%