UK Growth Trust
A focused stockpicking FTSE All-Share fund with strong performance since inception.
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"The Fund benefits from the rigorous research conducted by both our financial and social responsibility analysts"
- Performance
- Why recommend this fund to your clients?
- Fund aims
- A closer look at the Fund
- What does the Fund invest in?
- Fund suitability
- Investment philosophy
- Top 10 holdings
- Sector allocation
- 2 stock profiles
- Fund manager strategy and outlook
- Investment process overview
- Fund manager and investment team
- Fund facts
- How to invest
- Literature
Performance of £1000 invested over 5 years
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Value to latest month end, total return, bid to bid price, Net income re-invested.
Past performance is not a guide to future performance and the value of this investment can go down as well as up. This is
not a guaranteed investment and you may get back less than you have put in.
Cumulative performance (% change to 30/09/11)
| 1 year | 3 years | 5 years | Since launch (25/09/89) | |
|---|---|---|---|---|
| Fund | -8.9 | 7.8 | -4.2 | 381.3 |
| Sector Median | -5.4 | 17.8 | -0.5 | 264.7 |
| Quartile Rank | 4th | 4th | 3rd | 2nd |
Percentage Growth to latest month end, total return, bid to bid price, Net income re-invested.
Discrete performance (% change to 30/09/11)
| 30/09/2010 - 30/09/2010 |
30/09/2009 - 30/09/2010 |
30/09/2008 - 30/09/2009 |
30/09/2007 - 30/09/2008 |
30/09/2006 - 30/09/2007 |
|
|---|---|---|---|---|---|
| Fund | -8.9 | 13.2 | 4.5 | -18.8 | 9.4 |
| Sector Median | 5.4 | 11.2 | 11.6 | 23.2 | 10.7 |
Percentage Growth for discrete 1 year periods, bid to bid price, Net income re-invested.
[back to top]Why recommend this fund to your clients?
- First quartile performance against the IMA UK All Companies sector since launch, over 20 years ago.
- An established stockpicking FTSE All-Share fund.
- Industry leading Social Responsibility expertise, integrating environmental, social and governance issues into our investment decision making process.
A closer look at the Fund
What is the Fund's aim?
The Fund aims to deliver top quartile performance over a rolling three-year period measured against the UK All Companies Sector.
The Fund also aims to outperform the FTSE All-Share Index.
[back to top]What does the Fund invest in?
The Fund has the ability to invest across the FTSE All-Share Index. This universe consists of all the sectors of the UK equity market.
Fund suitability
The Fund is suitable for investors looking for:
- long-term capital growth through investing in an actively managed fund featuring high quality UK stocks
- a fund that will consider social responsibility as part of its overall investment process.
Investment philosophy
Our investment philosophy and style is best described as follows:
- Focused -The portfolio will typically have between 50-60 holdings and over 40% of assets in the top ten holdings
- Long-term - Investment holding periods of three to four years
- Stockpicking - We construct portfolios on a bottom up basis
- Responsible - Embedded environmental, social and governance (ESG) analysis provides a broader perspective and represents the views of our customers in the investment process.
- Investment themes - The increasingly short-term nature of the investment industry, evidenced by declining stock holding periods, results in long-term opportunities being overlooked. We have adopted a long-term investment philosophy and evaluate the effect of long-term investment themes.
- Industry trends - The increasingly narrow focus of most investors has resulted in our broadening the scope of inputs beyond traditional investment research to identify wider industry trends or linkages between industries.
- Company specific - We believe that the market can inefficiently discount company specific events such as management change. Therefore we devote a large amount of analytical resource to changing company situations.
Our investment approach is structured to consider companies at three levels to identify stocks which are mis-priced.
Top 10 holdings
(as 30/09/11)
| % Fund | |
|---|---|
| British American Tobacco Plc | 5.0 |
| BG Group Plc | 4.2 |
| Standard Chartered Bank | 3.5 |
| BP | 3.5 |
| Shaftesbury | 3.2 |
| SABMiller/td> | 2.8 |
| GlaxoSmithKnline | 2.7 |
| HSBC Holdings | 2.6 |
| Rio Tinto | 2.4 |
| Tullow Oil | 2.3 |
| Total | 32.2 |
Sector allocation 30/09/11
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Stock example
1. Standard Chartered
Standard Chartered is an emerging market bank which retains extensive interests throughout the Asian wholesale and retail markets. As governments look to deepen monetary policy at the same time as more companies access primary markets, Standard Chartered is well positioned for strong and sustainable profits growth. In addition, the possibility of greater consumer penetration of basic banking products provides a strong background for the group's retail operations.
2. Smiths Group
The company delivers products and services across a range of industries such as detection, medical and energy. The appointment of new management with a proven track record of delivering value for shareholders enhanced the potential attractions of the group. Previous management had failed to drive the company forward. The new CEO has announced a number of achievable restructuring improvements, which will ultimately result in strong share price performance.
[back to top]Strategy and outlook
Over the last three months the UK equity market has risen by 1.0%, reflecting the continuation of an improving economic outlook. Overall in 2010, the UK equity market rose by over 14%, thus providing a superior return to most other asset classes. Looking forward, despite the uncertain economic background in parts of the world, notably a number of peripheral countries in Europe, we anticipate that equities can rise further in 2011 as corporate profitability remains strong and the global economic growth continues in the core areas of the world, such as Asia and the US.
During the last three months the Trust has underperformed against the median of the peer group, reflecting the underperformance of a number of emerging market-related holdings, such as Standard Chartered and Johnson Matthey. In addition, the Trust also suffered some underperformance from an underweight position in Royal Dutch Shell and Vodafone, stocks that both performed well during this period. Over the last twelve months, the Trust delivered a return of 7.0% which was slightly behind that of the FTSE All-Share Index. Our strategy is biased towards those companies which will benefit from the continuing economic recovery. We believe that boom conditions will become increasingly apparent in some parts of the world, as never before have we seen a Western recovery coupled with premium Emerging Market growth. We expect economic growth to be around 4% which will provide a positive backdrop for equities. The Trust remains positioned towards a number of companies with exposure to Asia, such as SABMiller and Standard Chartered. In addition, holdings in InterContinental Hotels Group and GKN offering exposure to a stronger recovery in the West have also been increased. A new holding in National Grid was initiated in the first quarter, where we believe a fundamental re-assessment of the group’s North American activities could return the group back to its core operations.
Over three years the Trust was ranked in the fourth quartile. The Trust continues to be biased towards those companies with a genuine strong franchise in Asia and exposure to the recovery in the US.
[back to top]Investment process overview
1. Initial screening
- the investment universe consists of the FTSE All-Share Index
- companies are filtered for those looking attractive from a theme/ industry/company perspective
- detailed research and analysis is then undertaken on the stocks identified.
2. Security selection
- stocks are assessed against a number of key criteria such as valuation, management quality, environmental, social and governance performance
- valuations are predominantly cash-based.
3. Portfolio construction
- stock positions are determined primarily by the risk/reward potential of a particular investment
- the portfolio is focused in nature, with 50-60 holdings.
4. Risk management
- risk is assessed prior to investment in the research process by considering the potential for capital loss
- risk is then assessed across the portfolio by considering sector and factor risk (for example interest rate sensitivity)
- weekly risk and performance monitoring occurs with independent review by the Head of Equities.
Fund manager Andrew Moffat
| Years in industry | 21 |
| Years at The Co-operative Asset Management | 11 |
Andrew Moffat currently manages the UK Growth Trust, having previously managed the UK Income with Growth Trust for 11 years. He was nominated for Income Manager of the Year (Investment Week 2006, Income sector) and in 2005 achieved 2nd place for investment performance in Citywire's UK retail industry awards. Andrew has over 20 years of industry experience. He previously worked for Equitable Life as UK Fund Manager and trained as an Investment Analyst with Confederation Life in the City. He qualified as an Associate Member of the Society of Investment Analysts in 1990 and is an ongoing Associate of the CFA, UK. He has a BA in Economics and an MA in Finance & Investment.
Why choose The Co-operative Asset Management?
The fund management activities of The Co-operative Financial Services (part of The Co-operative Group) are undertaken by The Co-operative Asset Management. The Co-operative is a household name in the UK offering a wide range of services to consumers including food, pharmacy, travel and other financial services such as insurance, banking and mortgages.
The Co-operative Group has over 12 million customers, of whom over 290,000 are investors in our Unit Trust range, amounting to over £2 billion of assets under management.
Our distinctive approach is reflected in a number of unique investment credentials. We are the only UK fund manager to:
- apply a common core approach to responsible investment across all the funds we manage
- apply active engagement across all the funds we manage
- feed valuable business insights gained from our engagement process back in to company analysis performed for investment purposes.
The Co-operative Asset Management was also the first UK investor to publish its Company AGM voting record on its website in 2002†, a practice now increasingly adopted by fund management groups offering SRI.
In advocating The Co-operative Asset Management to clients, advisers can be assured that they are recommending:
- Britain's most ethical brand, The Co-operative Group*
- a responsible investment approach which fully integrates financial and ESG criteria in stock selection
- an investment process characterised by clear and informed views on why companies are undervalued and offer good long-term prospects
- an investment resource comprising experienced and committed individuals working to deliver out-performance while effecting positive change in the companies they invest in.
*An independent consumer survey carried out in 2007 and 2008 found that The Co-operative was the most ethical brand in Britain for both years. The Co-operative Group was ranked number one for 2007 and 2008 with The Body Shop and Marks and Spencer ranking second and third respectively. The GFK NOP Ethics Brand Survey was conducted in the US, UK, France, Germany and Spain amongst 5,000 individuals in total. The study found that consumers are increasingly choosing to buy brands which they believe to be ethical, with many willing to pay a premium for an "ethical guarantee" (GFK NOP Press Releases 2007 & 2008). [back to top]
Fund facts
| Manager name & location | Andrew Moffat, Manchester |
| Fund type | Unit trust |
| Launch date | 25th September 1989 |
| Index/benchmark | FTSE All-Share |
| Sector | UK All Companies |
| No. of stocks (as at 30/09/11) |
61 |
| Fund size (as at 30/09/11) |
£956 million |
| Prices | co-operativeassetmanagement.co.uk or the Financial Times |
| Distribution dates | January, July |
| Lipper ID | 60009200 |
| Sedol code | 159797 |
| PTR (as at 30/06/11) | 69.05% |
| TER (as at 30/06/11) | 1.54% |
The Co-operative Financial Services has signed up to the internationally recognised UN Principles for Responsible Investment. They reflect the increasing relevance of environmental, social and corporate governance issues to investment practices and in signing the Principles, the organisation publicly commits to adopting and implementing them.
[back to top]How to invest
The UK Growth Trust is available to investment professionals through a number of platforms including Cofunds, Fidelity and Hargreaves Lansdown:
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