Rathbone fund manager and chief investment officer Julian Chillingworth is focusing on a number of recovery stories that play the signs of improvements in UK consumer spending and the housing market.
The £62.8m Rathbone Recovery fund focuses firstly on stock specifics relating to the recovery potential of a company. However Chillingworth says recently more of these opportunities can be found in UK domestic names that link directly to the UK economy’s own recovery.
Chillingworth notes particular areas of progress in the UK economy in better than expected unemployment figures, increasing consumer confidence and signs that the housing market is beginning to improve outwith London.
The fund recently revisited long-term holding Halfords, thanks to benefits from both internal improvement within the company and its links with the UK consumer.
He says: “We previously sold Halfords but we came back to it after it established a new management team about three or four months ago. Since then they haven been rationalising the business as well a improving customer service.
“It is a very domestic business in a niche area which also neatly dovetails into the increase in consumer confidence in the UK, where people seem to be happier to go out a spend more money.”
Estate agent LSL was also bought as a play on both consumer confidence and the uptick in the housing market, according to Chillingworth. He says: “LSL are the second largest estate agents in the country.
“They have estate agents around the country and with the government keenly encouraging first time buyers, the whole housing market is beginning to bubble outside of London. We therefore thought this would play the housing market and rising consumer confidence.”
The fund’s more established holding with Booker Wholesale also taps into consumer spending on services and eating out, while offering an alternative to other pub company stocks, says Chillingworth.
He adds: “Booker is a better play because while it isn’t cheap, it is a growing business that is very well run and we know the management very well, whereas the problem we feel with some of the pub companies is that they have still got a lot of debt.”
Rathbone Recovery’s cumulative performance to 29 July 2013
|158 / 285||143 / 282||161 / 282||68 / 268|
Source: FE Analytics