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FUND MANAGER VIEWPOINT: RICHARD STAVELEY, MAJEDIE
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WELCOME
TO THE
INVESTOR
CENTRE
G
lobal stock markets
remained volatile in Q1
as both Japan and the
EUmoved their interest rates
further into negative territory,
with the latter adding to its
QE programme.This increased
concerns about China’s rate
of growth and the impact of
commodity prices.The
prospect of another rise in
US interest rates receded;
some question whether
policymakers have the tools to
return world economic growth
to a decent upward trajectory.
The impending vote on
Britain’s membership of the
EU brought further
uncertainty and caused some
weakness in sterling. Emerging
markets remained unsettled,
primarily due to concern about
the Chinese economy. In
fixed-interest markets, gilt
yields dipped lower while
weakness in high-yield bonds
at the start of the quarter was
largely reversed.
IN THIS SECTION
24 Viewpoint
Richard Staveley, Majedie
26 Unit Trust Portfolios
28 Fund manager commentaries
24
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THE INVESTOR
Small companies formpart of
Majedie’sportfolio for the
St. James’s PlaceUKGrowth
fund.Howdoyouworkwith
theothermanagersof the fund
atMajedie?Are theresynergies
betweenthedifferentpartsof
theportfolioanddoyouget
ideas fromothermanagers?
My portfolio is drawn from the
1,300 companies that make up the
bottom 10%, by size, of the FTSE
All-Share and from the AIM Index,
and account for 10% of the fund’s
assets; although that figure is
dynamic – it has been as low as 7%
and as high as 13%. I have regular,
informal discussions with the other
three managers – James de
Uphaugh, Matthew Smith and Chris
Field – mainly about
macroeconomic trends, market
intelligence and sectoral insights.
There are occasions when we
overlap. For example, Chris and I
both acquired shares in the Home
Retail Group ahead of the takeover
offer from J Sainsbury. But these
instances are rare.
The key synergy comes from
the portfolio having exposure to
the good, long-term performance
of small companies through having
a dedicated manager and a
Viewpoint
RichardStaveley,Majedie
The fund manager looks at how small
companies are faring in the current economic
climate, as well as the best prospects for growth
diversified stock selection,
something few other UK all-
company funds have.
What is the outlook for small
companies?Which sectors
and companies offer the best
prospects?
The long-term performance of
small companies has been
outstanding.That said, the past few
years have been particularly strong
for the sector, so a period of mean
reversion is to be expected.There
is also the issue of Brexit.While I
think that is unlikely, the chance of
it happening is greater than the
market believes.The impending
normalisation of interest rates is
also a headwind.
I take a stock-picking approach
and am currently focused on
domestic secular trends, as well as
companies that are not economically
sensitive and are using self-help to
drive profit growth. In addition, we
are overweight on companies
exposed to overseas
earnings.Atthe
moment, for example, there are
some attractive, well-funded oil and
gas companies.All shares in the
sector have been driven down by
the falling oil price, irrespective of
their ability to withstand its effects.