The Trustnet Alpha Manager heads up MFM Slater Growth, which is the second best performing fund over a one year period in the entire IMA universe. Slater is also the third best performing manager over this period; the only fund manager in the top five who does not invest in gold-focused unit trusts.
In an interview with Trustnet, Slater explained his reasons for outperformance.
"I favour niche companies that chase rapid, dynamic earning growth, and which are adequately insulated from potential disasters," he said.
"In a stagnant market place, top performing companies that meet these criteria are disproportionately rewarded. In the last two years or so, earning forecasts have been very timid as a result of the financial crisis. As such, companies that beat forecasts were rewarded significantly," he added.
Top 5 performing managers
| Fund manager |
Returns % |
Flagship fund |
| Tom Winnifrith |
136.16 |
SF t1ps Smaller Companies Gold |
| Robert Lyon | 62.88 | Smith & Williamson Global Gold & Resources |
| Mark Slater | 55.58 | MFM Slater Growth |
| David Baker |
55.5 | CF Ruffer Baker Steel Gold |
| Trevor Steel |
55.5 | CF Ruffer Baker Steel Gold |
Source: Trustnet.com (Data year-to-date 22 December 2010)
The fund has benefited from being underweight in financials, and has had marked success from its three biggest holdings: Hutchinson China Meditech, Cape and Andor Technology.
"These companies have been big drivers of the fund's outperformance. Price-earning multiples were significantly depressed in the aftermath of the crisis, and these excellent companies had absurdly low ratings."
"In July, Cape had a multiple of just five, which is ridiculous for a company of this quality. Shares have nearly doubled since then, and even though the ratio has been adjusted to nine, this is still very low given that it is expecting to grow by 15 per cent growth in the next five years."
The fund's performance is even more impressive when compared to its sector and benchmark; Financial Express data shows that MFM Slater Growth has outperformed IMA UK All Companies and the FTSE All Share by around 70 per cent in the last year.
Performance over 1-yr
Source: Financial Express Analytics
Slater's unconventional optimism doesn't stop there though. With price-earning ratios still depressed and the outlook for the UK economy mixed at best, he believes that there is a long way to go for this disproportionate outperformance.
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