Mark Dampier: The fund manager who's top of my Mutual appreciation society
Friday 07 March 2014
Much of the best action in the UK stock market over the past five years has come from smaller and medium-sized companies. To some extent, their larger counterparts have been forgotten and left behind.
One fund I believe should be considered to rebalance this is the Old Mutual UK Alpha Fund, managed by Richard Buxton. After running the same mandate successfully at Schroders for more than 10 years, Mr Buxton was poached last year by Old Mutual to run a fund identical in style. The new fund is already over £1bn in size and is still receiving healthy inflows.
Since his move last June, performance has been encouraging. However, it has not all been plain sailing. Earlier this year two companies in the portfolio, Rolls-Royce and Tate & Lyle, issued profit warnings on the same day, leading to falls in their share prices. That said, he hasn't sold either position and is likely to add to both positions on further weakness. He will shortly be meeting Rolls-Royce's management and maintains confidence in a strong order book; and while Tate & Lyle is in a period of transition, he believes investors are overlooking the firm's longer-term potential.
Mr Buxton may be one of the UK's most well-known stock market bulls, but even he felt somewhat queasy at the beginning of the year, given a plethora of optimistic comments on the economy and the market. He was, therefore, quite pleased to see a dip in January bringing some fear back into the market. He took the opportunity to top up positions in which his confidence remains, such as International Consolidated Airlines, on the back of price weakness.
Following a strong 2013, 2014 may see more of a churning effect. Indeed, so far this year 25 per cent of FTSE 100 companies have disappointed in their reporting. Like many fund managers, Mr Buxton makes the point that earnings growth needs to come through in order for prices to continue to rise. He notes, however, that the US, whose economy has been picking up strongly, and where monetary stimulus has been reduced but not eliminated, has been a source of strength for world stock markets. Interestingly, European and UK markets have seen a turnaround during afternoon trading, following falls in morning trading. Mr Buxton notes this is often a result of American share-buying.
Mr Buxton's fund is very much the antithesis of a tracker. He has always realised you have to do something different in order to add value over and above the benchmark. More recently he has been buying out-of-favour mining stocks where he expects demand for resources to be better than the market believes; Chinese demand for commodities is likely to remain robust, companies are scaling back production and cutting costs, while Mr Buxton expects to see greater concentration on shareholder value.
His contrarian approach is reflected in the fund's top holdings which include HSBC, Lloyds, Royal Dutch Shell and Rio Tinto. Elsewhere, he has had great success with positions such as International Consolidated Airlines and Legal & General.In terms of his wider views, Mr Buxton remains highly critical of the present political scene. In his view, politicians are being particularly unhelpful to investment and business development. Indeed, the current opposing party are meddling to such an extent that it could put off investment ahead of the next election. He believes the Government is acting far too hastily in the case of RBS. Mr Buxton supported the bank's former chief executive Stephen Hester who, he felt, was doing the right thing by not selling off assets too rapidly. The result is Mr Buxton doesn't see taxpayers ever getting their money back.
Despite this, he remains a stock picker at heart and he believes the backdrop for equities is excellent. Though a gently rising trend in interest rates could derail this case, inflation has been falling so there is hardly any need to raise rates dramatically just yet. In this type of scenario he sees equities grinding up slowly but surely.
Mr Buxton seems to have settled in well since his move to Old Mutual, and in my view he retains an excellent pedigree as an active fund manager. I believe his fund could form a part of almost any long-term UK portfolio.
Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit hl.co.uk/independent
- 1 End of the licence fee: BBC to back radical overhaul of how it is funded
- 2 This restaurant has misunderstood the concept of 'cheese and biscuits'
- 3 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face death penalty
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 PornHub turns masturbation into energy in bid to save the planet
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
End of the licence fee: BBC to back radical overhaul of how it is funded
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
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