Sue Round: Mid-cap offers best value in UK
The FE Alpha Manager explains why she sees more profitability lower down the market cap scale.
Mid cap companies currently offer the best opportunities for UK investors, according to FE Alpha Manager Sue Round
, who says that there is little value in the large cap end of the market where most funds concentrate.
Round (pictured), who heads the £83.9m multi-cap Ecclesiastical Amity UK
fund, holds 32.4 per cent of the fund in the FSTE 250 and a further 7.8 per cent in smaller markets.
“I think investing in the mid-cap is a much more interesting part of the market,” she said. “We look for a company with a good value and that is positioned in strong investment areas.”
“So we like the mid-cap, but you need a fully diversified portfolio to make long term gains and you have to put up with the volatility.”
Round’s largest holding is Oxford Instruments, a FTSE 250 technology tools corporate, and the second is Dunelm Group, a homeware retailer also on the mid-cap index.
Round told FE Trustnet
that the fund’s ethical mandate means that there are a certain amount of FTSE 100 companies that she cannot invest in.
However she believes that due to her fundamental value approach to the companies she invests in, these areas are not very attractive propositions anyway.
“When you look at ethical investing in its typical form, there are quite a lot of areas that are excluded,” she said.
“This is shown especially in the UK markets where only 60 per cent is available for our fund.”
“So areas we have to leave alone are mining, oil and tobacco for instance. However, companies such as miners have very unclear structures so you would probably want to avoid them anyway.”
“In truth, companies like that we wouldn’t touch with a barge pole,” Round finished.
Round has managed the Ecclesiastical Amity UK fund since 1988, meaning she has experienced great changes what is considered to be ethical investing.
“There is now a more engaged approach to social responsible investing (SRI), and investors and institutions are far less negative and are more positive and active towards an ethical mandate.”
According to data from FE Analytics, Round has returned 145.34 per cent over a 10 year period. This beats her peer group composite which returned 123.23 per cent over the same time frame.
Performance of manager versus peer group composite over 10yrs
Source: FE Analytics
Her Ecclesiastical Amity UK fund has outperformed its FTSE All Share benchmark and its IMA UK All Companies sector over 1, 3, 5 and 10 year periods.
The fund also has had top quartile performances in its sector over 1 and 3 years and was second quartile over 5 and 10 years.
Ecclesiastical Amity UK has a minimum investment of £200 and a total expense ratio (TER) of 1.64 per cent.