Fund of the week: one for your ‘to-buy’ list

“In a world in which precious few fund managers are capable of consistently outperforming their index, Bill Mott is an exception,” says Steve Johnson in the FT. Having built up an 11-year record at Credit Suisse’s flagship CSAM income fund between 1985 and 1996, he went on to make it the most successful income fund in the UK when he took control of it again between 2000 and 2003.

Now, after four years away from active fund management, during which time he took on a strategy role at Credit Suisse, Mott’s back, this time as head of the PSigma Income Fund. Since its launch in March, the fund has already attracted over £130m. “I’ll be recommending it, as he is one of the top guys for equity income,” Mark Dampier of Hargreaves Lansdown tells Financial Adviser. “It will be on my to-buy list.”

So what is Mott doing with his £130m? In March, when the fund launched, he noted that the top 20 stocks in the FTSE 100 (which make up 50% of its value) “have underperformed dramatically” since 2003, as they have been perceived as out of the range of merger-and-acquisition activity. “This has left a significant valuation anomaly, with the very big companies trading at 20-year price-earnings relative lows and yield relative highs,” he tells Money Marketing.

Mott doesn’t expect this to last for much longer and is firmly putting his money where his mouth is: 70% of the fund is invested in these stocks. Mott is also looking to tap into foreign growth stories, hence his positions in large caps, such as Diageo, Tesco, and Standard Chartered – all of which are exposed to fast-growing markets abroad.

PSigma Income Fund top ten holdings

Name of holding and % of assets

HSBC Holdings (UK Reg) 7.8%
GlaxoSmithKline 6.6%
BP 6.4%
Royal Dutch Shell B 5.5%
British American Tobacco 4.9%
AstraZeneca 4.4%
Vodafone Group 4.3%
Lloyds TSB Group 4.2%
Tesco 3.8%
Royal Bank of Scotland Group 3.6%

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