Why would you describe this fund as a 'one to watch' and how could the strategy work in investors' portfolios?
The Church House UK Equity Growth Fund (CHUK) was created 21 years ago to be the core UK element of our private client portfolios, providing long-term capital growth. We have an active share over 85%, from a portfolio of 45-50 investments. Our primary focus is on investing in the highest quality businesses listed in London, generating strong cash flows and benefitting from durable structural growth.
CHUK was opened to external investors in 2020 for the first time, coinciding with the launch of a new, cheaper, Z share class (OCF = 0.65%). The Fund has a strong long-term track record and, with cash now at 1%, we are fully invested, reflecting our confidence in the outlook for UK equities in 2021.
Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors, your investment process and the make-up of the investment team?
The is a high-conviction fund, focused on owning a portfolio of the highest quality London-listed businesses. We are genuinely long-term investors, with 55% of the portfolio having been held for over a decade and 15% held since 2000. We are disciplined on valuation, demanding a reasonable margin of safety in all new investments and being patient in building up positions. We place great emphasis on active engagement with management teams and, when deemed necessary, will take an active role in influencing corporate governance. We have an experienced investment team and have added new hires over recent years to further strengthen our capabilities.
Can you identify a couple of key investment opportunities for your fund you are playing at the moment in the portfolio? This could be at a stock, sector or thematic level.
We added significantly to our consumer exposure during the sell-off in 2020, making new investments in Greggs, JD Sports and Auto Trader. Shares in these businesses have already begun to recover and we believe that there remains significant upside as we move into a post-lockdown recovery. UK consumers have £150 billion in excess savings after three lockdowns and, with summer fast approaching and, crucially, a world-leading vaccination programme, we are looking forward to a bumper few months of domestic spending.