It is now a year since I reviewed a new fund from Rensburg that launched around the same time as the Skandia UK best ideas fund. The UK managers’ focus trust is Rensburg’s own version of a best ideas portfolio and, given the calibre of its UK desk, I was optimistic that it would perform well.
Well, we are virtually a year down the line so I think it is worth evaluating how the funds compare in terms of performance.
It is interesting to see that Rensburg’s approach, which one could describe as fettered, has given Skandia’s unfettered strategy a run for its money. The two are neck and neck.
There is no doubt that Skandia has a fantastic line-up of managers but perhaps the short lines of communication at Rensburg have been a point in its favour. Here are a team that have been working together for many years. They know each other’s strengths and weaknesses and do not suffer from big egos.
Anyone who has ever been to Leeds to visit Rensburg’s offices will know there really is a great atmosphere and team ethic there. The managers can make sensible decisions on their sector weightings.
For example, if they are all bullish on financial stocks, they will make a decision on how much risk they are willing to take. But even in sectors such as financials and oils, the individual stocks can be very different from each other. You only need to look a the performance of BP and Shell against something such as Burren or Dana Petroleum to see how huge the disparity can be.
The Rensburg UK managers’ focus trust has now grown to £107m, which is an impressive sum given its relatively low profile. There is no doubt that Rensburg has loyal supporters and money has been going into the fund with virtually no money out. New money is split equally among the four fund managers and the same principle is applied to redemptions.
It is my belief that they may need to reassess this policy with regard to redemptions as there is a risk that it may cause the portfolio to become unbalanced. So far, this has not been an issue but I am sure Rensburg will cross this bridge when it comes to it. It is crucial that it keeps the fund’s structure relatively intact.
Indeed, it is that structure that has helped the fund over the last year. It is perhaps inevitable that a best ideas fund will be overweight in mid and small caps and this has been a good place to invest over the last year. The team have great strength in that area, with Mark Hall, Paul Spencer and Stuart Sharp. Each has a tremendous individual track record.
I have great sympathy for Colin Morton, the large-cap specialist, who has been rock solid but it is much harder to pick blue-chip stocks as they are more influenced by macro factors.
In my opinion, Sharp has done a particularly good job during the fund’s first year. His stock ideas have really helped to boost the fund’s performance.
He does not pay too much attention to market timing – none of the four does – but he did start to sell many of the most successful holdings in July as they reached his price targets. By the end of July, his part of the portfolio had almost 17 per cent cash (the fund as a whole was 11 per cent cash) which would have provided some support as markets continued to fall during August.
Basically, what you get with this fund is an extremely talented team who have bags of common sense and will meet any problems head-on and come to a sensible decision.
The managers have added incentive to perform because they have invested a considerable amount of their own money in the fund. I fully expect that the fund and the team will go from strength to strength.
Those who did not get in on the ground floor still have plenty of time to invest but I would not hesitate. In my view, the Rensburg UK managers’ focus trust is a strong buy.
Mark Dampier is head of research at Hargreaves Lansdown