Slater runs MFM Slater Growth, which has made 111.13 per cent for investors in this period, almost five-times the returns of the IMA UK All Companies sector it sits in. Despite this performance it remains unloved by investors, experiencing net inflows of less than £10m this year, according to data from FE Analytics, while the IMA UK All Companies sector has been the least popular among retail investors for seven out of the past 10 months.
"I think the UK market being unloved is very dumb, frankly," Slater said. "We put out some data in global categories by mistake on some institutional systems and we got lots of calls from people asking: ‘What is this product?’."
Data from FE Analytics shows that the IMA Global sector has underperformed the IMA UK All Companies sector over every time period from one year to 10.
Performance of sectors over 10-yrs
Source: FE Analytics
Despite this, IMA Global experienced net sales of £414m in September, according to IMA figures, while the UK sector saw overall outflows of £51m.
Five crown-rated MFM Slater Growth has only £58.2m in assets under management, even though it is the best-performing fund out of 2,604 in the IMA universe over three years.
It also beats the other 255 in its IMA UK All Companies sector over five years, although its small cap focus means it is always likely to outperform the large cap dominated funds in its sector in rising markets.
Our data shows that the fund’s outperformance has overwhelmingly occurred in the past three years, and that this has pushed up the five-year figure.
Performance of fund vs sector and benchmark over 5-yrs
Source: FE Analytics
Slater re-focused the fund on small and mid caps three years ago, and its track record since then has driven it to the top of the performance charts.
The manager says that institutional investors are starting to show interest in the fund, and he expects it to experience substantial inflows at some point in the future, but for now it is suffering from a general limited investor appetite for UK equities.
Slater explained that the UK market provides a high degree of international exposure – with 70 per cent of the earnings of UK companies coming from abroad – making investors’ eagerness to buy global funds particularly baffling.
One year ago he launched the MFM Slater Income fund to tap into the equity income story that has gained traction in recent years.
Despite having no track record at all, the fund has reached £25.6m already, and has so far seen more new money this year than the established MFM Slater Growth fund.
"Ninety per cent of the income opportunities are outside the FTSE 100," Slater said. "So that’s a strong reason to include companies you do not find in the big income funds."
Slater agrees with Standard Life’s Thomas Moore, who told FE Trustnet earlier today that the potential in the large cap defensives favoured by IMA UK Equity Income funds was reaching its limit.
"The reason they all buy these stocks is firstly their size, and also I think sometimes a lack of imagination," Slater said.
The manager holds a tranche of defensive stocks picked for their dependable yield, but adds to this two other categories: growth stocks that also pay dividends, and a cyclical group of stocks that have the potential for upside in their stock price.
Slater targets a yield of more than 5 per cent and has currently achieved 4.3 per cent, according to data from FE Analytics.
He is looking for dividend growth of 10 per cent and says that he will rarely hold a company that yields less than 4.
When the fund was launched it had a large amount in cash and the stock markets rose, meaning that its performance figures took an immediate hit in the first two months.
However, over the past year, data from FE Analytics shows it has outperformed its sector average, returning 13.1 per cent while IMA UK All Companies made 11.81 per cent.