Mark Dampier: A small and nimble fund with a good mix of stocks
Saturday 12 June 2010
It is probably fair to say OLIM UK Equity is a fund name few people recognise. Set up in 1986 by Matthew Oakeshott and Angela Lascelles, OLIM run almost £7bn across private client portfolios, unit trusts and investment trusts. They are now owned by the bank Close Brothers, but the founders are still very much involved in the business. The OLIM UK Equity income fund is tiny by industry standards (and in comparison to the company's overall assets) at only £8m. However, it is managed by an established management team of three: Andrew Impey, who has 28 years' experience, Simon Jaffe with over six years' experience, and Angela Lascelles, founder of the company.
This small fund aims to find the best stock ideas across the UK market. They are looking for shares that pay a good level of income as well as providing plenty of growth potential. This narrows down the field quite quickly. So the portfolio is concentrated at around 30 to 40 stocks (currently 38) with a typical split of half large and half small to medium-sized companies, although they have very little in smaller companies at the current time.
Broadly, they separate their stocks into four categories. Firstly, stocks with unrecognised growth potential, which are longer-term holdings they believe will benefit from strong structural themes. A good example is their holding in Dechra Pharmaceuticals, which has a stable business supplying veterinary medicines as well as a more exciting drug development side. The latter part of the business is more risky, but they have a good pipeline of medications, many of which have already been approved for use on humans.
Secondly, they invest in stable income producers which tend to be larger, defensive stocks, such as GlaxoSmithKline, Vodafone and Royal Dutch Shell. This tends to form the foundation of the fund's income, and is an area I believe is particularly undervalued at present.
Thirdly, they look for recovery or restructuring situations. Examples here include Unilever, a company which is increasing investment, cutting costs and introducing new products. It also has more than 50 per cent of its sales in emerging markets, which could be a huge area of growth over the next 20 years.
Finally, they look for valuation anomalies, stocks that are basically just too cheap with a big discount to their peer group. One stock that few people know about is N Brown, a retailer, which at first you might think was an area to avoid given the economic situation. However, they have a very good online business selling what are politely called "plus sized clothes". On a 4 per cent yield and a price earnings ratio of 12 times, they look cheap, and the market is perhaps overlooking them.
One area the management team do tend to avoid is what they call "glamour stocks". This might include mining companies or shares that are generally over-hyped. You won't see any blue sky solar power companies or some unheard-of oil exploration stock. Nor with three experienced individuals managing the fund do you have to worry too much about changes of personnel. Angela herself was a founder of the business, and while Andrew Impey and Simon Jaffe are the newer entrants with only two years in the company, they seem to be here to stay and are looking forward to growing the fund.
So in summary, this is a solid UK Equity Income team looking in both traditional and less traditional areas of the market. They do precisely what I would want: search for the best stocks with little reference to any benchmark or sector average. Performance has been good to date, with the fund up 54 per cent since launch in January 2002, compared to 31 per cent for the IMA UK Equity Income sector. The fund's small size is certainly an advantage, making it nimble and flexible, and with an income yield of around 4 per cent you can afford to be patient and wait for the growth to come through.
Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent
- 1 Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
- 2 Isis burns thousands of books and rare manuscripts from Mosul's libraries
- 3 People who sleep more than eight hours are more likely to have a stroke, research shows
- 4 Kanye West climbs on table at Nando's to crowd chants of 'Yeezus' before Brit Awards 2015 performance of 'All Day'
- 5 New theory could prove how life began and disprove God
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...
£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...
Day In a Page
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley