Liontrust UK Growth, Majedie UK Focus and R&M UK Dynamic Equity are among the funds taking a higher weighting to UK oil stocks than the FTSE All Share, according to research by FE Trustnet. 
Oil has dominated the headlines for much of the past week with titans Shell and BP reporting stronger than expected results despite middling oil prices.
“It’s been some time since reading a set of oil results could be described as a pleasure, but Shell’s fit the bill,” noted Nicholas Hyett, equity analyst at Hargreaves Lansdown.
While Michael Baxter, economics commentator for The Share Centre, was more enthused about rival BP, noting: “The recent tripling in profits at BP – during the first quarter of this year – seemed to support a wider narrative that the oil majors were seeing a lift in profits on the back of the rises in the oil price.”
However, oil prices have fallen away since the start of the year and is down by 20.57 per cent since January, with some commentators worried that this slip back could impact oil stocks resolve.
Performance of index year-to-date
Source: FE Analytics
Below FE Trustnet looks at the FE Alpha Managers that run a four crown-rated or higher UK equities fund and have a higher weighting to UK oil stocks.
The first of fund of note is Chris Reid’s Majedie UK Income. It is the most overweight in oil stocks of the four funds under review with 16.84 per cent held in the sector. The FTSE All Share’s weighting is 11.82 per cent.
The £935m, four crown-rated fund is a top quartile performer in the IA UK Equity Income sector over the past five years but has struggled over the last 12 months.
BP and Shell, which both are among the top dividend payers in the UK, account for 6.5 and 5.9 per cent of the fund respectively.
The fund has a yield of 4.44 per cent and a clean ongoing charges figure (OCF) of 0.77 per cent.
Performance of funds vs index over 5yrs
Source: FE Analytics
Reid’s other four crown-rated fund – Majedie UK Focus – which he runs with Matthew Smith, James de Uphaugh and Chris Field is also overweight oil & gas producers (14.5 per cent).
BP represents a 5.6 per cent weighting in the fund, while a further 5.5 per cent is invested in Shell. The £858m fund has a yield of 1.54 per cent and an OCF of 1.52 per cent.
Unlike the income fund, the fund aims to maximise total return rather than targeting an attractive yield though both aim to outperform the FTSE All-Share Index over the long-term.
Both Majedie UK Income and Majedie UK Focus are ahead over a five-year period, returning 109.21 and 101.14 per cent respectively.
Liontrust FE Alpha Managers Anthony Cross and Julian Fosh are also overweight oil stocks in their five crown-rated fund Liontrust UK Growth.
The management duo, who have 50 years of combined experience, invest in UK large- and mid-cap stocks using the Economic Advantage process meaning its sector exposures being significantly different from those of the market and many of its sector's peers.
As such, the fund is overweight healthcare, industrials and consumer goods as well as oil & gas, which makes up 13.2 per cent of the portfolio holdings.
The fund has been a consistent performer, in the top quartile of the IA UK All Companies sector over one, three and 10 years and in the second quartile over five years.
The fund, which like the funds above also includes Shell and BP among its top 10 holdings, has a yield of 2.28 per cent and an OCF of 0.89 per cent.
Performance of funds vs index over 5yrs
Source: FE Analytics
The other FE Alpha Managers with a four crown-rated or higher fund taking an overweight position in the sector are Philip Rodrigs and Daniel Hanbury who run the R&M UK Dynamic Equity.
The £185m fund, has been a top quartile performer over one, three and five years and is in the second quartile of the IA UK All Companies sector over 10 years.
Rodrigs and Hanbury have invested 13.4 per cent of the fund in the oil & gas sector and, of course, has Shell and BP in its top 10 holdings.
The fund, which is underweight the FTSE 100 and overweight mid- and small-caps has a yield of 2 per cent and an OCF of 0.85 per cent.
It has a 40 per cent growth bias with 28.5 per cent in quality stocks while 12.2 per cent is invested in recovery stocks and 13.5 per cent in asset backed securities.
In an upcoming article FE Trustnet will look at the FE Alpha Managers that run a four crown-rated or higher UK equities fund with a mining overweight.