Best In Class  

Best in Class: Marlborough Special Situations

Best in Class: Marlborough Special Situations

Last year was somewhat of a rollercoaster for UK investors. 

The FTSE 100 began January at a level of 7,648 before falling below 7,000 in March. It then soldiered on, shrugging off everything else that was thrown at it (a little like Prime Minister Theresa May, one might say) and reached an all-time high in May of 7,877.

At the time of writing on December 12 2018, it has fallen to 6,895.

Cue the doom and gloom headlines – admittedly mostly from overseas: “UK stock market loses all 21st century gains.”

Yes, the FTSE 100 did start the millennium at 6,930. Yes, it is below that today.

But the headlines miss an important point: the statement is only true if you look at price returns. If you take those all-important dividends into account, the FTSE 100 has still returned 91.5 per cent, according to data for total returns in sterling from FE Analytics, December 31 1999 to December 11 2018.

Albert Einstein didn’t call compounding the eighth wonder of the world for nothing.

The headline, although undoubtedly eye-catching, also misleads investors in my view, because it is just talking about the index.

There are a number of active UK equity managers out there who have made a lot of money by investing in some of the UK’s great companies, rather than blindly investing in them all. They have invested in tomorrow’s winners, not today’s, and it is for this reason I am all for active investing over passive investing.

Fidelity Special Values, for example, has returned 796.7 per cent for investors (based on FE Analytics data, December 31 1999 to December 11 2018). And fund managers did not need to be ‘punchy’ to get results: the much more conservative Rathbone Income fund has returned 328.6 per cent over the same period. Rant over.

This week’s Best in Class is, quite simply, the best performing UK equity fund of the 21st Century, according to FE Analytics data. Its returns of 972.5 per cent beat not only those of all other open-ended UK equity funds, but its investment trust peers too.

Marlborough Special Situations has been run by Hargreave Hale’s Giles Hargreave since July 1998. He has been assisted by Eustace Santa Barbara since September 2014, and also has the support of the company’s analysts.

Mr Hargreave and his team have a richly deserved reputation as astute stock pickers.

This flagship fund has a small- and mid-cap focus and it has held up well across a wide range of market conditions. By conducting their own primary research, the investment team believe they can exploit the market information shortfalls and inefficiencies associated with small- to mid-cap analysis.

Their investable universe includes more than 2,000 stocks from the FTSE AIM, FTSE Small Cap, FTSE Fledgling, and the smaller companies in the FTSE 250.