Medium-sized UK companies have a big advantage over their FTSE 100 cousins, says Andy Brough. They often have "greater potential for continued growth". And this has certainly proved true for Brough's portfolio. The Schroder UK Mid 250 fund, which he has managed since its launch in 1999, "has been knocking the ball to the boundary for several years", says Citywire achieving returns of 101% against a 58.2% sector average over the last three years.
Brough puts his outperformance down to his "pragmatic" approach to the £1.7bn fund. His portfolio is fairly concentrated, investing in around
84 stocks and he hopes to cut that number to around 75 a strategy that will allow the fund to benefit from his best ideas.
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One good idea has been to invest in sectors exposed to Government spending. The fund has targeted private finance initiatives in particular focusing on firms that have benefited from the outsourcing of public projects by local government. "When the pound in your pocket is under attack, Government spending is a good place to be."
He also likes leisure stocks, telling the FT he prefers them to "out and out growth stocks", as leisure "is less cyclical because there are less people rushing out to set up nightclubs and pubs". Another plus point is that venture capitalists are pumping money into the sector. Brough likes brewer Wolverhampton & Dudley, and casino operator Stanley Leisure.
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Schroder UK Mid 250 fund top ten holdings
Name of holding % of assets
Babcock International 3.4
Findel 2.7
Carillion 2.6
WS Atkins 2.6
Victrex 2.4
Inchcape 2.3
JD Wetherspoon 2.3
Investec 2.2
Resolution 2.2
John Laing 2.1
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