Fund of the week: The four-factor winning formula
This small-cap fund has chalked up a 25% rise over three years against a 2.6% drop in the FTSE Small Cap index.
Philip Rodrigs likes to keep beating his benchmark. Since taking over the Investec UK Smaller Companies Fund in 2006, he has chalked up a 25% rise over three years against a 2.6% drop in the FTSE Small Cap index. And despite returning 82% over 12 months, Rodrigs still sees further upside for the 80 or so firms in his portfolio. "There are still a lot of companies where (recent economic) stability is not fully reflected in the price."
An Oxford Economics graduate, Rodrigs bases his investment decisions on Investec's unique "four factor process". He looks for high-quality firms with cheap valuations, where operating performance is improving and investors are beginning to take note. This led him to buy Trinity Mirror for 25p back in March when it was trading on a price-to-earnings ratio below 1. It is now priced at 163p. "It had hit hard times and the market was assuming they would go bust. But the newspaper industry is very cash generative, so we felt the banks wouldn't see it that way."
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Investec UK Smaller Companies Fund top ten holdings
