Man GLG Undervalued Assets Fund

it is a stock picker’s fund which looks to exploit short term weaknesses in share prices. This is not a buy and hold strategy and therefore may not appeal to every investor

There are over 400 UK Equity Growth and Income Funds; providing investors with access to many different investment styles. So choosing the right fund depends upon understanding their methods and aims.

Performance is part of the equation but equally the management team is crucial. We have met a number of talented Fund Managers, the likes of Standard Life Investments, Neptune, Schroders, Legal and General, Threadneedle and Liontrust (not all of these are in our portfolios).

The Matterley Undervalued Assets Fund was established in August 2008 and delivered strong out-performance compared to the benchmark. In 2013 the manager left Matterley and joined GLG where they replicated the fund and launched the GLG Undervalued Assets Fund. He also continues to manage the old Matterley Fund.

The fund has attracted nearly £150 million since its launch and therefore reflects the faith many investors have in the manager’s style. The name of the fund seems to imply its style is more akin to the M&G Recovery Fund or the JOHCM UK Dynamic Fund. In both cases these funds look for undervalued businesses and back them through to recovery. By their very nature the holdings tend to be long term and in particular with the M&G Recovery Fund the holdings can be up to 10 years.

This fund does seek out undervalued stocks which might be classed as recovery but the time frame is much shorter with a two year time frame. In fact a proportion of holdings achieve their target price within six months of the investment being made. So effectively this fund is about exploiting market weakness in shares and selling when the upside comes.

This to some extent makes it closer to the SLI UK Equity Unconstrained Fund which looks to invest in good businesses which are undervalued. Comparing the performance SLI has significantly outperformed but the big difference is volatility; the SLI Fund has volatility at around 18% whereas the GLG Fund is around 13%.

Effectively to achieve this level of outperformance investors have to accept a higher degree of volatility as can be seen in the falls in 2011 where the SLI down 10% more than the Matterley Fund, even going into 2014 the SLI fund has not responded well to the more volatility markets. It doesn’t make one fund better than the other but it gives investors an idea where to place the fund.

In this update with the manager we cover his thoughts on where the opportunities are and talk about some of the areas he sees value.

Fund Facts Morningstar


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