Mark Slater, former manager of Legg Mason Slater Growth, is to launch the MFM Slater Recovery fund ...
Mark Slater, former manager of Legg Mason Slater Growth, is to launch the MFM Slater Recovery fund on 10 March.
The fund, which was first reported by Investment Week in October, had been delayed but Slater now sees enough opportunities in the market to justify a launch. He said: 'We delayed until we felt there was compelling value in the market. We are not attempting to time the market as a whole but we think there are now sufficient opportunities where companies have seen the worst.'
He added the situation in the market now is analogous to 2000 when it was peaking.
Slater said: 'There was a rolling out of sectors after the market reached its summit in March 2000. It wasn't until the end of the year that some sectors started falling. We are now seeing some areas that have reached the bottom but this process hasn't finished.'
The fund, to be listed in the UK All Companies sector, will be administrated by Malborough Fund Managers and is to be seeded with £3m of Slater's own money.
Slater, son of financier Jim Slater, said he will manage the portfolio based on picking recovery plays such as undervalued growth companies that have potential for upside and shares that are on discounts to asset values. Other areas will include companies that have seen a downward blip in earnings that is likely to be shortlived.
Low-risk recovery plays with high yields and low P/E ratios and those companies Slater identifies as aggressive recovery plays will also form his universe of stocks.
Companies with serious problems where management needs to be turned around will fall into the aggressive play category. Slater said such companies can offer potentially explosive upside.
Slater ran the Legg Mason Slater Growth fund until Legg Mason took its management in-house and passed it to John Johnston in 2000. It was subsequently renamed UK Emerging Growth.
Earlier this year, Johnston was replaced as manager on the fund, one of the worst-performing UK All Companies vehicles over the past three years. Over the three years to 10 January, the fund fell 75.06% compared to a -35.26% sector average return.
The £30.8m UK Emerging Growth fund is now managed by Andrew Whalley.
After giving up the Legg Mason mandate, Slater took over a portfolio for Malborough, the Bowland fund, which he is still running. Over the 12 months to 17 February, the Bowland fund has declined 15.66%, bid-to-bid, compared to a UK All Companies return of -28.6%, ranking it nine out of 309 funds.
Slater said he is not planning a high profile launch and, in current market conditions, he could not justify a significant advertising spend.
The fund will have a 1.5% annual charge and a front-end fee of 5.25%. A discount of 2% will be in place from 10 March and will run for three weeks. The unit trust will offer 3% commission to intermediaries.
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