Fund of the week: Star manager Stick suffers from own success
Investors have rarely had much to complain about since Carl Stick took over the management of the Rathbone Income fund in 2005.
Investors have rarely had much to complain about since Carl Stick took over the management of the Rathbone Income fund in 2005. The fund has returned 101.7% over three years not bad, given the FTSE All Share index has returned 88.7% and the average fund a little less, at 87.4%. It is also the only UK equity income fund consistently to have been in the top quartile over the last six years.
However, in 2005, says Stick, he did find himself facing a "substantial head wind". The length of the bull market made undervalued shares with strong asset backing and good long-term income prospects (his favoured investments) much harder to find, says Richard Lander in The Daily Telegraph.
Stick expects to continue facing this problem in 2006. Part of his difficulty, says Lander, is that he is "suffering from his own success". Stick recently sold BPB and Excel on the back of bids from St Gobain and Deutsche Post respectively, and now rumours are rife that other holdings such as HMW, Lloyds TSB and Centrica may be potential bid targets. This means that he has a lot of cash to invest just as the supply of his kind of stock dries up.
Still, Stick is not despairing, and nor should his investors. There are, he says, good opportunities in sectors where more consolidation is on the cards. In particular, he flags up UK property companies and UK-listed European property funds as looking very "promising".
Contact: 020-7556 8800, www.rathboneunittrusts.com
Rathbone Income fund top ten holdings
Name of holding % of assets
BP 3.2%HSBC 2.9%Barclays 2.5%Royal Bank of Scotland 2.5%Standard Chartered 2.4%Rio Tinto 2.1%BT Group 2.1%Vodafone 2.0%National Grid Transco Group 2.0%Pendragon 2.0%