Jim Slater was one of the City’s highest-profile investors some 40 years ago. Now, his son, Mark, has been hitting the headlines with his MFM Slater Growth Fund. This returned 73% in 2010, beating its nearest competitor by a stunning 18%. So what’s been the secret of its success?
Holding a mixture of blue chips (such as GlaxoSmithKline and British American Tobacco) and medium to small caps, “the fund focuses on buying dynamic growth companies cheaply in relation to their earnings growth rates”, says Slater.
“Price to earnings [p/e] ratings were far too low as a result of the financial crisis, and are still recovering.” Meanwhile, “economic growth has surprised on the upside as many analysts’ forecasts were too low”.
In turn, the fund’s returns have been based on “investing in companies that have beaten growth forecasts while enjoying upward re-ratings in their p/e multiples”.
So can success continue for the fund? Slater reckons so. “Rather than sectors, we focus on firms – typically operating in growing markets (often substantially overseas), or growing niches – with upbeat trading prospects. We’ll thus continue targeting a small number of truly exceptional businesses. We try very hard to avoid companies we think might come under pressure – we’re wary of anything exposed to consumer or government spending”.
As with most unit trusts, it’s not especially cheap – the annual management fee is 1.5%, while the standard initial charge is 5.25%. But with the managers putting their money where their mouths are (they’re the fund’s largest investors), that may still be a price worth paying.
• Contact: 020-7220 9469.
MFM Slater Growth Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Hutchinson China Meditech | 9.6 |
| Cape | 7.9 |
| Andor Technology | 5.7 |
| City of London Investment | 4.4 |
| British American Tobacco | 4.3 |
| CSF | 4.2 |
| GlaxoSmithKline | 3.8 |
| Imperial Tobacco | 3.8 |
| Patsystems | 3.5 |
| Entertainment One | 3.4 |