Adam Avigdori, co-manager of the £350m BlackRock UK Equity Income fund, says it is on track to get back in shape after almost halving in size following Nick McLeod-Clarke’s exit three years ago.
Avigdori manages the fund with David Goldman and lead manager Mark Wharrier. The trio also manage the Growth fund at the firm.
The fund saw significant losses following previous lead manager McLeod-Clarke’s decision to step down from fund management for health reasons. The fund held around £700m assets when McLeod-Clarke left.
Avigdori says: “As with any fund manager move, clients will come back to you when you are proven.”
The UK Equity Income fund has grown its dividend 22 per cent in the past three years making it first quartile for performance, Avigdori says.
The fund has delivered a performance of 34.7 per cent versus the IA Equity Income sector average of 24.2 per cent over three years, according to FE.
However, he adds: “We haven’t solved all the problems yet and what we must do is take what we’ve done over the last three years and do better in the next years.”
Talking about the recent FCA study showing many active managers don’t offer value for money compared with passive funds, Avigdori says “results are everything”.
“We won’t deserve to raise money and we won’t deserve to charge what we charge unless we deliver the results”.
The fund has 70 per cent exposure to free cash flow firms, such as Unilever and British American Tobacco, 20 per cent in growth firms, like Arm, and 10 per cent in turnaround firms such as cruising company Carnival.
The UK Income fund invests mainly in FTSE 350 firms. It is a concentrated portfolio of 40 stocks with holdings weight ranging from 1 per cent to 5 per cent.
Avigdori points out that more than 70 per cent UK companies grow their dividends and says many peer fund managers are missing opportunities.
The Income fund sits in the same sector as Neil Woodford’s £9.2bn Equity Income fund.
He says: “There are a lot of big funds and there’s not many small funds and interest in us is still there. I think these guys have done a phenomenal job but the next 10 years for them are going to be very different than the last 10 years.
“There’s no point in trying to recreate what some of these great guys have done. It is about offering a differentiated approach.”
“The benefits of running a small fund in this sector is that we have the ability to be flexible and dynamic and change when we want to. When you get to £7bn some of their positions are bigger than our entire fund.”