M&G Recovery Fund

The strategy requires patience and he admits that the wind is against them.

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).

In the past we held the M&G Recovery Fund in our portfolios, but we no longer hold it. We carried out due diligence at the time when we met the deputy fund manager but felt that they could not provide the confidence we needed to continue to hold the fund.

At the time this was important because the fund had been suffering a prolonged period of underperformance and we were looking for reassurance on whether to stick with them or look for an alternative option. In the end we choose to end our association with the fund. In hindsight it seems a wise move as the underperformance has continued.

So the question is why anyone would even consider investing in this fund. Clearly (based on short term performance (under 10 years)) the strategy is out of favour or the fund is just too big.

The reason we keep coming back to the fund is the sense of history associated with the fund. It is without doubt a unique fund in the industry. It is one of the oldest in the UK going back over 40 years, during that time it has had just three managers and its long term (10 years plus) track record is excellent.

The style of management is different, it is contrarian and we have had a very different investment environment over the last five years which has clearly not favoured the fund. So is the fund cheap, are there opportunities or is it destined to be a lame duck, at the end of glory years and heading for the dustbin of time.

This time around the update we had was with Tom Dobell and in this review we will share some of the thoughts he shared with us and highlight the investment style.

Fund Facts Morningstar


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