Mark Dampier: Slater’s investment mix gives balance


At the time of writing, the UK stock market, as measured by the FTSE All Share Index, has fallen around  7 per cent from the high it reached just a few weeks ago.

Given the extraordinary burst of performance seen over the past few months many investors were probably looking for an excuse to take some profits. Such a correction was therefore not a surprise and while some commentators have tried to herald the falls as the start of a new bear market, I think that this is  an overreaction.  

Investors need to consider that while bond yields have risen (and prices have fallen) they are still only at the level seen last Christmas. I do not see UK interest rates rising before the next general election, so while I am not an outright fan of bonds nor do I see their demise as imminent. What recent market movements do show though is how equities and bonds are interlinked. As bond yields have risen, equity markets have fallen.

In this environment I continue to believe a selection of high-quality, equity income funds can form the cornerstone of almost any portfolio. Providing investors are willing to take some risk with their capital the yields on offer are attractive, and there is the potential for income and capital growth over the long term.

A relatively new fund that recently caught my eye was Mark Slater’s MFM Slater Income Fund which launched in September 2011. It has an historic yield of 3.9 per cent while Mr Slater believes the prospective yield is 4.7 per cent.

Income investing is an interesting departure from the norm for Mr Slater, who also manages the growth-focused MFM Slater Growth and MFM Slater Recovery funds. On this fund he employs a strong income focus. He wants all the companies in which he invests to make a meaningful contribution to the fund’s yield.

Broadly speaking, he separates companies into three buckets. First there are growth stocks that also have a good yield. In this category he cites Cineworld, which has a 4.5 per cent yield, but also strong earnings growth of around 12 per cent a year. He has been impressed by the company’s use of the internet in getting to know its customers and spurring stronger growth than competitors. 

Secondly, he highlights companies that are not growing their earnings rapidly, but where he sees material upside in a stronger economy. This category includes companies that might have experienced short-term difficulties, but where they have stabilised and are on the path to resolving them. BAE systems, for example, has seen earnings stagnate due to defence cutbacks, but Mr Slater believes with a yield of 5.3 per cent he is being paid to wait for the upside.

Finally, there are “dividend stalwarts” which offer slower, but reliable earnings growth with sustainable dividends. Examples in this category include GlaxoSmithKline and KCOM, the old Kingston Communications, where dividends are growing strongly.

Mr Slater believes holding a mix of companies in the above categories creates a balanced portfolio. He is agnostic as to company size and presently has around 28 per cent invested in FTSE 100 companies, a further 33 per cent in mid-sized firms in the FTSE 250 Index, and the remainder in smaller businesses. He tends to hold between 60 and  70 companies in the portfolio, but more importantly he is currently seeing plenty of opportunities.

Like any good fund manager,  Mr Slater finds deciding when to sell his biggest challenge. When something goes wrong the decision tends to be easier. He sold Chemring after the company cut its dividend. With growth stocks that continue to perform well the decision is harder as the reward of share-price growth has to be set against a falling yield. He held Restaurant Group, for example, as the yield went from 4 per cent to 2.5 per cent on the back of strong share-price growth.

Mr Slater’s other two funds are near the bottom of the tables right now, but this is often the time they are worth taking a closer look at.

Funds go out of fashion at times, but managers who maintain a disciplined approach often bounce back.

In the past when Mr Slater’s funds have bounced back they have done so strongly.

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

Life and Style
A teenager boy wakes up.
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
An Apple iPhone 6 stands on display at the Apple Store
businessRegulators give iPhone 6 and 6 Plus the green light
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Have you tried new the Independent Digital Edition apps?
Life and Style
Britain's internet habits have been revealed in a new survey
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
Life and Style
Arts and Entertainment
A still from Duncan Campbell's hour-long film 'It for Others'
Turner Prize 2014
Life and Style
food + drink
Arts and Entertainment
Tony Hadley in a scene from ‘Soul Boys Of The Western World’
musicSpandau Ballet are back together - on stage and screen
Life and Style
Bearing up: Sebastian Flyte with his teddy Aloysius in Brideshead Revisited
lifePhilippa Perry explains why a third of students take a bear to uni
Arts and Entertainment
Sir Alan Sugar appearing in a shot from Apprentice which was used in a Cassette Boy mashup
artsA judge will rule if pieces are funny enough to be classed as parodies
Arts and Entertainment
Finacial products from our partners
Property search




Fee-free, expert mortgage advice:

  • Find the right mortgage for you
  • Latest best-buy deals
  • Mortgage calculators
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

    £300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style