In a sector comprising more than 300 portfolios, Julie Dean’s fund is among the top 10 per cent in the total return stakes over all four time frames. For point of reference, Cazenove UK Opps is also a top decile performer over three and six month periods.
Dean (pictured) has managed something that a number of her higher profile rivals have missed out on by some distance. The £7.6bn M&G Recovery fund has underperformed over one and three years, the £2.4bn Fidelity Special Situations is a bottom decile performer over five years, while Richard Buxton’s Schroder UK Alpha Plus fund has failed to achieve top decile performance over any of the time frames.
Performance of funds, sector and index
| Name | 1yr (%) | 3yrs (%) | 5yrs (%) | 10yrs (%) |
| Cazenove UK All Companies | 25.98 | 54.15 | 49.25 | 203.12 |
| M&G Recovery | 8.53 | 18.12 | 13.06 | 198.43 |
| Fidelity Special Situations | 18.16 | 11.85 | 11.23 | 198.09 |
| IMA UK All Companies | 12.75 | 23.44 | 2.91 | 112.99 |
| FTSE All Share | 8.53 | 25.05 | 6.80 | 118.07 |
Source: FE Analytics
Dean has achieved this with slightly less volatility than her peer group, as well as a lower max drawdown.
Cazenove UK Opportunities also delivers top decile performance in the risk-adjusted return stakes over a one, three, five and 10 year period. Over 10 years, Dean’s portfolio has a Sharpe ratio of 0.49, compared to 0.22 from the average UK All Companies fund.
The Sharpe ratio measures a fund's return relative to a notional risk-free investment – in this case, cash. The difference in returns is then divided by the fund's volatility.
Performance of fund versus sector and index over 10 years
Source: FE Analytics
In terms of inflows, Cazenove UK Opps has been left in the shadows by many of its higher profile rivals for many years, in spite of its stellar performance. However, it has turned heads of late, and according to FE inflows data is the best selling UK All Companies portfolio of the last twelve months.
In the last year, assets under management (AUM) have more than quadrupled, growing from £167.5m to £701m.
Speaking exclusively to FE Trustnet, Dean explains that the fund’s attitude towards risk has been the biggest booster of performance.
“The fund is trying to deliver consistent returns year in, year out,” she explained. “We’re looking to beat the benchmark [FTSE All Share] by 3 per cent per annum after fees.”
“Our priority, however, is to protect against the downside. If we do that effectively, it means that we don’t have to stick our neck out to capture the upside.”
According to FE data, no fund that has been less volatile than Cazenove UK Opps has returned more over the last 10 years, and only two funds – Liontrust Special Situations and Unicorn Outstanding British Companies – have returned more over five years.
Unlike some managers who pride themselves on taking a long-term view, Dean says she never buys a company unless she can make money from it within a year.
She says she “tilts” the portfolio to take advantage of movements in the business cycle. In the last year, for example, Dean has moved the portfolio away from value defensives, into more cyclical companies.
The fund’s biggest move has been into financials, which now has a sector weighting of 22.3 per cent – an overweight position of around 5 percentage points relative to the All Share. Dean has increased her stake in RBS, Lloyds and Aviva, as well as financial services company Jupiter.
“We now have a proper backstop to the sovereign debt crisis thanks to the bond buying programme, and we’re also getting some margin improvements in some of the banks,” she said.
“It’s been a risky area and one the market hasn’t wanted to be in, but I’d much rather take on financial risk than commodities risk at the moment.”
Cazenove UK Opportunities is very much a multi-cap portfolio, investing across the UK market. At present, the fund has 54 per cent in the FTSE 100, 36 per cent in the FTSE 250, and 5 per cent in both the FTSE Small Cap and cash. Dean says the fund will never have more than 5 per cent in the small cap market.
Top-10 holdings include FTSE 100 giants BG Group and Diageo, as well as much smaller companies like Howden Joinery Group.
The manager says she is entirely comfortable with the rate of inflows coming into the fund, and is "well below capacity".
The fund appears on the FE Select 100 – a quant-based fund list of 100 funds which identifies the best available portfolios in each asset class, and has five FE Crowns.
It is available for a minimum investment of £1,000 and has a total expense ratio (TER) of 1.54 per cent. Dean took over the portfolio in December 2002.