New managers breathe life into struggling SJP fund

Majedie UK Equity is one of the best performers in its sector and has no less than three FE Alpha Managers at the helm.

The £1.2bn fund is managed by Adam Parker, Christopher Field and James de Uphaugh, and has returned 237 per cent to investors since they took over in March 2003, making it the ninth-best performer in the IMA UK All Companies sector since then. 

The good news is that investors who cannot afford the £100,000 minimum investment required to invest in the Majedie fund have, since April this year, been able to gain access to the same managers via the SJP UK Growth fund. 

At first glance the fund, which has a far more palatable minimum investment of £1,500, is a chronic underperformer. 

Over five years it has delivered 1.52 per cent, less than the sector's 5.7 per cent average and far less than the Majedie Equity fund which has returned more than 30 per cent. 

Over three years the SJP fund lags further, returning 22 per cent while the average fund in the sector has made more than 30 per cent.

Since the new management team took over, however, the SJP fund has seen its fortunes change dramatically.

Over six months it is up 6.76 per cent, almost doubling the 3.76 per cent return from the average fund in the sector and mirroring the performance of the Majedie fund closely. 

SJP chief investment officer Chris Ralph says the new team brings a valuable mix of strategies to the fund. 

"We have known Majedie for a long time, and so have our advisers – Stamford Associates."

"We’ve not been able to access their skills in the past because their capacity has been constrained, but they came to us with some capacity and said that we could have access to it, so we went for it." 

"What we like about them is that they are high-conviction managers."

"Each one [within the mix of four running the SJP fund] can express their individuality and their own convictions, which is great, but the portfolio as a whole benefits because it has got four different inputs rather than just one."

Ralph thinks this mix of individual stock picking and team-based portfolio construction creates a powerful base for the fund.

"One of the big benefits of this is that it eliminates key-man risk. If there is a problem with one then there are three others there as well." 

The majority of the portfolio has already been transformed to suit the Majedie approach, Ralph said.

"These things follow a standard transition process. We appoint a transition manager – a specialist organisation whose purpose is to transition a fund from a legacy manager to an incoming one, who will give the transition manager a list of investments they want to hold before they arrive." 

"The transition manager is responsible for making sure that transition takes place in an orderly fashion." 

The portfolio in its current format is weighted towards larger stocks, with around 10 per cent in a small cap high-conviction portfolio run specifically by FE Alpha Manager Adam Parker. 

Ralph said: "We think what Adam brings to this element of the portfolio is access to strong ideas in a part of the market where the difference between a good stockpicking choice and a bad one is very clear." 

"The qualities of a highly skilled small cap manager are focused on the ability to add stocks that are going to do really, really well."

"That is an important skill, and one which is complementary to the ability to differentiate between good quality stocks in large caps where the information flow is so great that there is a lot more to absorb." 

SJP UK Growth has a minimum investment of £1,500 and a TER of 2.24 per cent.