Equity  

Interview: Graham Campbell

But while the team has expanded and the fund range has increased from just one fund – Saracen Growth, renamed UK Alpha as of July 1 2016 – to three, the tenets of the business are unchanged. 

Mr Campbell says: “We felt we had a good foundation of strong compliance and a good back-office approach, but felt there was a real need for income and that hasn’t disappeared. There are a lot of interesting opportunities in global businesses that will be paying dividends over the next five to 10 years. We try and find them, then construct a portfolio to reduce risk.” 

He notes the biggest risk the team can take when analysing a business is making over-optimistic assumptions. “We have what we think will occur, then [develop] a reasonable worst-case [scenario]. We do this for every business,” he says.

“No matter how attractive the central case, if the worst case is too adverse or too likely then we won’t invest. It is also a very useful early warning [system].” 

The long-term view is also important to the firm’s investment philosophy, focusing on a period of at least five years, which the manager quips is “four years and 364 days longer than everybody else”. 

“The hardest thing is to be patient. People often say [they are] looking for a turning point. We don’t believe we can add any value on timing, but [we] don’t hold on to expensive shares. Just because we sell them it doesn’t mean they go down, they can carry on [moving higher], but we look for cheaper shares that can go up,” he adds. 

“We don’t mind taking a contrary view. Craig [Yeaman] and Scott [McKenzie]’s funds [UK Alpha and UK Income] look nothing like an index. [They] have a large tracking error, and active share is 90-plus per cent. They really have a portfolio driven by interesting businesses. There are so many funds in the UK where they all look very similar [and the] top five is often the same.” 

But the chief executive acknowledges the biggest challenge for the business is to get this across to clients, particularly those who require a certain length or track record or a certain size. 

“We spend time talking to clients about our process. It is a long-term relationship and hopefully we build some understanding so they can see the value of it,” he says. 

Meanwhile, the biggest highlight is the people of Saracen, with Mr Campbell noting: “I have worked in larger companies where there are so many distractions or conflicts. [Here] the motivation is always constructive.”