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Rachel Reutter’s fund was recently kicked out of the IA UK All
Companies sector after raising its cash level above 20 per cent
JOHCM UK
Opportunities capital loss or a management team doing
some risky stuff where we could also
end up with permanent capital loss’.
“Being able to hold cash means, okay,
we can make that decision – we can sell
it to zero and get rid of the problem.”
After moving to a net cash position
above the Investment Association’s
permitted levels of 20 per cent, the
F FACT BOX
FE TRUSTNET
MANAGERS: Rachel Reutter & Michael Ulrich / LAUNCHED: 30/11/2005 / FUND SIZE:
£453.8m / OCF: 0.87%
FE CROWN RATING
PERFORMANCE OF FUND VS INDEX UNDER
MANAGERS’ TENURE
JOHCM UK Opportunities (3.45%)
FTSE All Share (3.45%)
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
8
Fe
-8%
They make use of a top-down
overlay to identify investable themes
– such as changing demographic
trends – that can be linked with its
bottom-up stock selection process.
Reutter said valuations have risen
significantly since the global financial
crisis with many UK equity funds
paying for quality or growth at any
price, which can hurt investors if
companies receive a sudden shock.
Given the level of concentration in
JOHCM UK Opportunities – with just
29 holdings – being able to offload
companies that are overvalued or
are being mis-managed could be
problematic. However, Reutter said
being able to move to large cash
positions can help offset this risk.
“A lot of funds have to be permanently
invested or as close to fully invested as
possible,” she explained. “It’s having
the mental flexibility to say: ‘Right, we
have a problem here. We’ve either got
overvaluation resulting in permanent
unds with large cash positions
are often criticised, with
investors arguing that they
should not be paying fees to a
manager not to invest. And when
that cash position reaches a quarter
of total assets, it can lead to investors
voting with their feet.
However, JOHCM UK Opportunities’
Rachel Reutter says the flexibility
provided by this cash position gives
her fund an advantage over other UK
equity strategies as it allows her to
minimise exposure to potential losses.
“The definition of risk has become
really distorted and for most of our
industry, risk means deviation from
some benchmark,” she said. “Whereas
our investment philosophy says: ‘let’s
try to avoid a capital loss’.”
Reutter and co-manager Michael
Ulrich invest in a high-conviction
portfolio of large-cap stocks, which
she describes as “the most unloved
sector out there”.
fund was moved from IA UK All
Companies to the IA Specialist sector
in September 2017.
JOHCM UK Opportunities has made
3.45 per cent since Reutter and Ulrich
took over in September 2017, level with
its FTSE All Share benchmark. The
average IA UK All Companies fund has
returned just 0.57 per cent.
Source: FE Analytics
trustnet.com