A positive outlook for UK equities has led JO Hambro Capital Management to re-open two of its UK funds to new investors.
The JOHCM UK Dynamic fund and the JOHCM UK Equity Income fund will be opened after soft closes in December 2019 and October 2013 respectively, meaning investment was only available to existing investors.
The firm said the decision was a result of the “high conviction” it has in its processes in the current market environment, as well as the “positive outlook” it has for UK equities, following a multi-year period of redemptions from funds in the sector.
Tjeerd Voskamp, JOHCM’s head of sales and distribution in the UK, Europe and Asia, said UK equities had struggled since the Brexit vote, but the firm believes the tide would turn in the sector’s favour.
“With undemanding valuations, increasing M&A activity and a positive macro backdrop, our fund management teams are very positive,” he added.
Investors have been flooding out of UK equities for several years.
During 2021, outflows from UK equities funds topped £4.4bn, and the UK All Companies sector has been the worst-selling Investment Association sector for five of the past seven years.
JOHCM's funds
The JOHCM UK Dynamic fund is run by Alex Savvides and its aim is to profit from “understanding and backing positive corporate change…that is often misunderstood or under-appreciated by the stock market”.
The £1.36bn fund returned 21.64 per cent over the past 12 months, compared with the UK All Companies sector which posted a 14.28 per cent return for the same period.
The JOHCM UK Equity Income fund totals £2.03bn and is run by James Lowen and Clive Beagles. It operates under a “strict yield discipline” which means the managers only buy stocks they believe will yield more than the FTSE All-Share index on a prospective basis.
Every stock held must also have the potential for capital appreciation, the firm says.
The fund posted a 24.07 per cent return in the year over the past 12 months, compared with the IA UK Equity Income sector return which posted a 16.76 per cent return.
Beagles, Lowen and Savvides said they believed the UK stock market was fundamentally cheap and ignored.
“Within that, our naturally contrarian styles lead us to stocks that are deeply misunderstood, underappreciated and undervalued.
“This creates a discount on a discount which we believe offers the opportunity for generating strong and consistent returns. We look forward to engaging with any new investors over the months ahead.”
The views mirror those of fund manager Nick Train, who said this week opportunities for investment in the UK equity market were “hugely encouraging” despite outflows seen in previous years.
He said: “I can barely remember a time in my 40-year career when there have been so many opportunities, especially in the deeply unloved UK equity market – where there are compelling growth stories on much lower valuations than global peers.”
