AXA IM to launch UK mid-cap fund

AXA Investment Managers is launching a UK mid-cap fund in early March, subject to FSA approval.

The fund will be managed by Chris St John, who has accrued over 11 years experience managing mid and small-cap portfolios.

A qualitative approach will be used for stock selection, while ensuring risk management is integrated through the investment process.

The launch complements AXA Framlington's fund range managed by the firm's UK equities team, consisting of 10 investment professionals managing over £4bn in assets across a range of market caps. Around 30% of total assets managed by the team are in FTSE 250 stocks.

St John says: "The FTSE 250 has, on average, outperformed the FTSE 100 by 5.7% in each of the past 10 years.

"Historically, well managed companies in this space have been able to capture the ‘sweet spot' of earnings growth, rating expansion and increasing liquidity and these enduring factors have contributed to this outperformance.

"With 49% of FTSE 250 profits generated from international earnings streams, this fund will provide us with an excellent opportunity to exploit both domestic UK and global markets."

St John has run a mandate in excess of £100m for an institutional client in this space for over three years.

Rob Bailey, head of UK Sales at AXA Investment Managers, says: "Now is an exciting time for mid-cap investment opportunities. The forecast for earnings growth is high, driven by both turnover growth and margin expansion, and valuations remain attractive.

"In addition, growing corporate cash balances should lead to an environment in which increases in capex spend, dividend growth and M&A become increasingly prevalent. It is our belief this provides a convincing story for investors."