Chelverton to launch UK small and mid-cap growth fund

Chelverton Asset Management is set to launch a small and mid-cap UK growth fund for new manager James Baker.

Baker joined the firm in June, after a 15-month stint at Rathbones Unit Trust Management helping run the firm’s UK Recovery fund.

The fund will share the strategy of the company’s income fund, with a focus on cash flow and the ability to command strong margins.

At least 80 per cent of the portfolio will be invested in “core” companies that match the firm’s quantitative and qualitative process.

The remaining segment will be used to buy more capital-intensive, cyclical companies such as oil companies, banks and property investors. “Blue sky” concept stocks will also make up the smaller part of the portfolio, although exposure will be capped at 5 per cent.

The fund will hold between 50 and 60 stocks and has an annual management charge of 75 basis points.

While Baker will lead manage the new fund, which launches 20 October, he will be supported by David Taylor.

Taylor co-manages the £344m Chelverton UK Equity Income fund alongside David Horner.

Taylor says the company has been looking to expand its product range after strong growth.

“To do so we needed to build the investment team, and having known James – a proven stockpicker in the small and mid-cap space – for many years, we were delighted when the opportunity presented itself to bring him on board, his appointment creating the opportunity to launch the new growth fund,” Taylor says.

Baker used to work for brokerage ABN Amro, in its small and mid-cap UK equities sales team.

He says valuations are looking attractive for small and medium-sized UK companies, relative to alternatives.

The UK and the US don’t feel like bad places to be, relative to other places in the world. And equities don’t appear a bad place to be either, relative to things like bonds.”