The managers of the CF Miton UK Value Opportunities fund George Godber (pictured left) and Georgina Hamilton (pictured right) are no doubt pleased with their near sector topping performance having just passed their three year anniversary on the popular portfolio. 
The fund has made 57.70 per cent since launch back in March 2013, in comparison the average fund in the IA UK All Companies sector returned 16.38 per cent and the FTSE All Share gained 11.68 per cent. This is the second best in sector.
However, while the fund’s investors are also no doubt pleased with this return, the news that they will be departing Miton and the fund will be unsettling for some especially for professional fund buyers among who the duo had built up many fans.
Godber will stay at Miton for at least 12 months while Hamilton will stay for six months or until replacements have been found, a spokesman for Miton said.
For now at least the confirmation of their eventual destination of their move is tightly under wraps (although some reports suggest Polar Capital), and so for those concerned we have put together in the meantime some potential replacements with help from expert fund pickers.
Man GLG Undervalued Assets
First up is this £442m fund headed by FE Alpha Manager Henry Dixon, who Hamilton and Godber previously worked with.
Ben Willis, head of research at Whitechurch Securities, says the fund is the obvious replacement.
“This is because Godber, Dixon and Hamilton all worked together on the same fund – Matterley Undervalued Assets. Godber and Hamilton decided to go off and run their own fund but using the same investment process and philosophy, whilst Dixon has ended up running the same investment process and philosophy at Man GLG,” he said.
“However, even though the funds are effectively replicas of each other, it is interesting to see the difference in their stock selection.”
According to FE Analytics, the fund has returned a top quartile 13.85 per cent since launch beating both its sector and index.
Performance of fund, sector and index since launch
Source: FE Analytics
Charles Stanley Direct’s Rob Morgan and Hawksmoor’s Ben Conway also agree that the fund could be a decent replacement.
Conway: said “The most obvious alternative is the fund run by his former colleague Dixon which we fairly recently purchased. The processes are pretty similar, even if the portfolios differ. Dixon recently commented his portfolio is as cheap versus the universe as it has ever been.”
Both funds were top quartile in 2014 and 2015 although Miton was the stronger performer in both years.
The fund has a clean ongoing charges figure [OCF] of 0.98 per cent
Morgan also thinks this £153m fund could work as an alternative. He said: “It would also be a decent replacement with a value based philosophy that is not too dissimilar.”
It is headed by a five-strong team of Alistair Whyte, Richard Newbery, Euan Macdonald, Keith Muir and Mark Williamson. Whyte and Newbery have managed the portfolio since 1991, McDonald since 2001 and Williamson since 2014.
While the CF Miton UK Value Opportunities is a multi-cap strategy Charles Younes, fund analyst at FE, points out it has a high correlation to the Numis Smaller Companies ex Its index as Godber and Hamilton have tended to favour smaller cap stocks over the past three years.
Over 20 years the Aberforth UK Small Companies fund has beaten the index and the IA UK Smaller Companies sector average by more than 250 percentage points. Over more recent time frames the fund is also ahead of the index and sector bit behind over 10 years.
Performance of fund, sector and index over 20yrs
Source: FE Analytics
The fund has a total expense ratio of 0.98 per cent.
Next, this £220m is tipped by IBOSS’s Chris Metcalfe who holds as much as his firm’s rules allow (4 per cent) of both CF Miton UK Value Opportunities as well as Franklin UK Managers' Focus in his own funds of funds and risk targeted model portfolios.
“If we didn’t already have our maximum allocation to it, our first stop would be Franklin UK Mangers’ Focus. It has a great stable of managers and performance has been fantastic,” he said.
“It still amazes me that there hasn’t been bigger flows into the fund.” It is not value, as it is more growth, but offers similar exposure.”
“Yes, the fund is more growth-orientated but I try not to get too hung up on labels. They are both genuine multi-cap funds. For example, the Miton fund has delivered stellar returns even though most value managers say they have had a tough period.”
Headed by Colin Morton, Richard Bullas and FE Alpha Managers Paul Spencer and Ben Russon, the fund is split between the four managers best ideas. The fund also has Mark Hall as deputy manager.
The fund is top quartile of the IA UK All Companies sector over one year and is top decile over five years. Since launch in September 2006 it is also top quartile with a return of 117.41 per cent. This is more than double the FTSE All Share and almost double the sector average.
Performance of fund, sector and index since launch
Source: FE Analytics
The fund currently has 23.8 per cent in industrials, it largest sector exposure.
The fund has a clean OCF of 0.84 per cent.
Investec UK Special Situations
Last up Adrian Lowcock, head of investing at AXA Wealth, says this £971m fund could be a suitable alternative.
“It’s manager Alastair Mundy is genuine contrarian investor looking for bargains in the market. The fund can shop anywhere and is less focused on mid and smaller companies with current positioning in the mega cap space as the manager sees opportunities in oil majors and banks.”
The fund has had lacklustre few years with poor relative performance to his IA UK All Companies sector peers. The fund is bottom quartile over one and three years and third quartile over five years.
Performance of fund, sector and index over 5yrs
Source: FE Analytics
However, many have put this – at least partly – down to value as an investment style being out of favour. Others have said it may due to holding high weightings to cash, buying back into the battered supermarkets too early and shorting the rallying S&P 500 index.
The fund has a clean OCF of 0.85 per cent.