Putting political policies aside, the most important aspect of the UK General Election as far as the stock market is concerned is that the man who runs the country is the same this month as it was last month – David Cameron is the Prime Minister. And the market loves nothing more than certainty.
With that in mind here are three gold rated UK equity funds for those investors who are bullish on the outlook for domestic stocks.
Lindsell Train UK Equity
This fund benefits from the stewardship of a seasoned and talented UK equity manager who has demonstrated a highly consistent approach.
Nick Train is an experienced manager who has run this fund since launch. He started his career as an investment manager at GT Management in 1981 and established Lindsell Train in 2000 together with his colleague Michael Lindsell. Train was appointed soon afterwards to run Finsbury Growth and Income, a closed-end fund managed to the same mandate as this fund.
Train's process is differentiated and has proved successful over a number of market cycles. Train selects companies from the bottom up and looks for unique and strong franchises that can prosper through a number of business cycles. The result is a concentrated portfolio with clear biases. Turnover is low given his time horizon and that he only sells out if he no longer considers a company to be of sufficient quality, or when it becomes too large a proportion of the portfolio, at which point he will trim.
Artemis Income
The fund features a distinguished pairing in Adrian Frost and Adrian Gosden, who have worked together here since Oct 2003, although Frost took charge here in Jan 2002. The managers share an impressive amount of industry experience and also draw upon the expertise of their fellow Artemis managers. The resources have been bolstered since Nick Shenton joined in mid-2012 to provide dedicated analytical support.
The managers are disciplined in applying a process that is proven over the long term. They seek cash-generative companies by applying cash flow and dividend screens to their equity universe with the help of SmartGARP (Artemis' proprietary stock-screening model). They believe that focusing on free cash flow yield is the equivalent of valuing the company as if it were a bond.
AXA Framlington UK Opportunities
This fund features a consistency of management and approach that makes it one of the best offerings in its sector.
Nigel Thomas has run this fund since joining Framlington in 2002 and employs a similar strategy to the one that served him well on his former mandates at ABN AMRO Asset Management which is now part of Artemis.
His investment philosophy emphasises diversification via a multicap approach with a focus on medium-sized and smaller companies. He tends to maintain at least one third of the portfolio in large companies that fall within the FTSE 100 Index and spreads the balance among FTSE 250 mid-cap stocks and smaller companies.
