Pension scheme investors are cautious. They look for a solid track record before investing in a fund. That’s why L&G UK Alpha Trust manager Richard Penny is so pleased about gaining his first pension client. “It is very exciting that this consistent performance is now gaining recognition.” He has every reason to be chuffed. Since launching in 2005, his fund has steadily outperformed the market, returning 153% over the last six years. It ranked top in the 296-fund IMA UK All Companies sector for three and five-year performance, and Penny has been touted as “the next Anthony Bolton”, with a string of awards to his name.
So what’s Penny’s strategy? He has two: he buys unloved companies that he thinks have a hidden worth; and small caps with high growth potential. Although he sticks to UK shares, the fund is a play on the global economy; more than 50% of earnings from his holdings come from overseas, while another 10% are British-based exporters. For example, top-ten holding OPG Power Ventures is listed in London but makes its money-building power stations in India.
“People haven’t heard of a lot of the stocks I hold, but that also helps us to get better returns because I can get them at keener prices.” Price isn’t everything, of course – “sometimes things are cheap for a reason” – but even so, he insists that not enough managers “like rooting around the full market spectrum”. Despite casting a wide net, the fund is quite tightly focused, holding an average of around 40 stocks, which Penny aims to hold for at least two years.
Contact: 0345-943 2432.
• Disclosure: The writer holds this fund.
L&G UK Alpha Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| OPG Power Venture Plc | 5.30 |
| Mecom Group | 4.69 |
| Allied Gold Ltd | 4.30 |
| XAAR | 4.27 |
| BG Group | 4.17 |
| Royal Dutch Shell | 3.99 |
| Johnson Service Group Plc | 3.74 |
| Prudential | 3.73 |
| Firestone Diamonds | 3.61 |
| SKIL Ports & Logistics Ltd | 3.61 |