JO Hambro Capital Management (JOHCM) has reopened two of its most popular UK funds: JOHCM UK Dynamic and JOHCM UK Equity Income, as the fund house’s outlook for the UK market has brightened.
The £2.2bn JOHCM UK Dynamic fund was soft closed in December 2019 while the £1.4bn JOHCM UK Equity Income portfolio was shuttered in October 2013 when management took steps to protect existing investors. The funds are among the largest in their respective sectors.
Up until this point they were only available to pre-existing and retail investors but Tjeerd Voskamp, JOHCM’s head of sales and distribution, said the decision was made to reopen them “as a result of the high conviction we have in our processes in the current market environment and our positive outlook for the asset class following a multi-year period of redemptions in UK equities”.
This recent positive wave for UK equities has followed years of headwinds, triggered by the Brexit vote in 2016, which was followed by Covid concerns and an unstable political landscape.
Since then, markets have shifted more towards value and the UK has reaped the benefits of this bias, as a large part of its index is made up of cyclical industries.
Voskamp said that “the tide may be about to turn” on UK equities, making it the right time to reopen the funds.
“With undemanding valuations, increasing M&A activity and a positive macro backdrop, our fund management teams are very positive,” he said.
In a joint statement managers Clive Beagles and James Lowen of JOHCM UK Equity Income and Alex Savvides, manager of the JOHCM UK Dynamic fund, said it was a “very interesting point in time” for UK investors.
“We believe the UK is a fundamentally cheap and ignored stock market and, within that, our naturally contrarian styles lead us to stocks that are deeply misunderstood, underappreciated and undervalued,” which they believe creates a discount and within that an opportunity to find outperformance.
Examining the funds and JOHCM UK Dynamic has eked out a better return over 10 years, making 166.3%, well ahead of its average sector peer.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
This is despite Savvides’ multi-cap, value oriented approach being out of favour during these years of rallying growth.
The manager invests in unloved companies but prioritises liquidity, which means when these companies recover they are able to thrive.
JOHCM UK Equity Income Dynamic has suffered the same issue over the past decade as its contrarian approach has also been out of favour with broader markets.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
As part of its income mandate, every stock is expected to yield more than the FTSE All Share index. This style bias explains why the fund has yo-yoed between second and third quartile in the past few years when growth has dominated but it has held up overall, making top-quartile returns over 10 years (149.8%).
| Fund | Sector | Fund Size(m) | Rank | Fund Manager | Yield | OCF |
| JOHCM UK Dynamic | IA UK All Companies | 1364.7 | 39 | Alex Savvides | 2.28% | 0.80% |
| JOHCM UK Equity Income | IA UK Equity Income | 2161 | 4 | James Lowen, Clive Beagles | 3.82% | 0.79% |