Yearsley is a fan of Savvides’ disciplined strategy and stockpicking abilities, which should see it outperform. He says the fund is a particularly attractive prospect because it has a relatively low level of assets under management and though Savvides is only in his 30s, Yearsley adds that the manager has already amassed a wealth of experience.
"Experience counts for a lot in fund management. Investors are naturally sceptical of younger managers, often preferring to invest with older, wiser heads," he said.
"However, we believe monitoring younger managers is important. Not only might they become stars of the future, but they may well provide some decent performance on the way."
"For Alex Savvides, manager of the JOHCM UK Dynamic fund, an important milestone has been reached. He has now been at the helm of this fund for five years, and throughout this period, performance has been exemplary."
"He has outperformed some illustrious rivals over this period too, although there are no guarantees this performance will continue, and he has had the advantage of a small, nimble fund," he added.
Savvides has run his £59.5 JOHCM UK Dynamic fund since it was launched in June 2008.
According to FE Analytics, it has returned 89.3 per cent since launch – meaning that it sits comfortably in the top quartile of the IMA UK All Companies sector over that time. It has also the doubled the returns of the FTSE All Share in the process.
Performance of fund vs sector and index since June 2008
Source: FE Analytics
The fund has been slightly more volatile than the index and the sector over this time, however. Nevertheless, Savvides boasts top-quartile performance over one, three and five years.
Yearsley says investors can expect that high level of performance due to the manager’s style.
"Mr Savvides (pictured) has more investment experience than you might suppose, given he is still in his thirties," he said. "Prior to joining JO Hambro's Mark Costar to help manage his UK Growth fund, he researched UK stocks as a broker for seven years. His central philosophy is that companies are dynamic, not static."
"By identifying catalysts for positive change – such as a change in personnel or direction, or an industry development that means fresh opportunity – he aims to profit when other investors’ expectations are pessimistic."
"This strategy means proprietary research is of the utmost importance, and Mr Savvides prides himself on his knowledge of companies in the UK market."
"Although this is not an income fund, Mr Savvides insists each company in the portfolio must pay a dividend – or be expected to do so in the next year."
Our data shows that JOCHM UK Dynamic has a headline of 2.38 per cent and although that may seem low compared with other income-generating portfolios, it has increased its net distribution over the last year.
Yearsley continued: "He believes paying a dividend instills a discipline in management, which serves as a good corporate governance 'filter'. Despite other problems a company might have, if cash is being generated to pay dividends, it has a better chance of prospering."
"Mr Savvides keeps the number of stocks in the portfolio quite low, at between 40 and 50. Although this increases risk, each holding makes a meaningful contribution to performance, enabling the fund to significantly outperform if he gets his stock picking right," he added.
Savvides runs a concentrated portfolio of just 51 holdings. His largest sector weighting is in financials, making up 28.5 per cent of his fund. HSBC, Numis, Lloyds, Legal & General and Standard Life are among the financial stocks he holds.
His largest individual holding is BP – making up 5.5 per cent of total assets under management. Despite the fact Savvides takes big calls on what are sometimes out-of-favour stocks, Yearsley urges investors not to fret.
"The excitement of turnaround stories should not lead you to believe this is a special situations or recovery fund laden with risk," he said.
"Mr Savvides is keen to position it as a ‘core’ UK fund and he keeps at least half invested in FTSE 100 stocks. He also ensures the portfolio remains balanced and has strict limits as to how much he can allocate to particular sectors."
"In recognition of the discipline of his process, thorough research and in-depth knowledge of the companies he invests in, we have decided the time is right to add the fund to our Foundation Fundlist of favourite funds across the major sectors for investors to consider," he added.
JOHCM UK Dynamic requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.5 per cent. However, like all JOHCM funds, it has a performance fee – 15 per cent if it outperforms its benchmark over one year.
