Each ‘focus on’ examines the objective of the fund, an analysis of recent performance, the manager, charges and other factors.

Within this ‘focus on’ we take a closer look at the M&G Recovery fund. This fund sits within the UK Equities asset class.

Fund objective

This fund aims to achieve capital growth by investing predominantly in a diversified range of securities issued by companies which are out of favour, in difficulty or whose future prospects are not fully recognised by the market. There is no particular income yield target.

Track record

This is a first quartile fund over one, three and five years.

For the year to date it has returned 49.20% compared to a sector average return of 35.77%. This places it 62nd out of 590 funds in the IMA sector.

This fund has a strong and consistent long-term performance record, demonstrating first quartile performance in discrete annual periods back to 2004/05, with the exception of a discrete annual period in 2005/06 when it returned second quartile returns.

The manager

This fund has been managed by Tom Dobell since March 2000. He has over twenty years’ investment experience, mainly with institutional portfolios. Dobell joined M&G in 1992 and is a member of the small cap team.

Tom Dobell previously worked for Phillips & Drew (PDFM) as a fund manager within their charity and small pension fund division. He graduated from Writtle College, after studying agriculture, in 1986.

It is worth noting that Dobell never invests in a stock without first meeting the management team from that company.

Style

This fund is run bottom-up with a long term absolute return ethos. It invests in companies of all sizes at different stages of recovery across all phases of the business cycle. The manager aims to find stocks where share prices have fallen well below their true worth, making them good value.

There is a flexible and pragmatic approach to stocks and the manager aims to hold stocks for between three and five years. Part of the approach taken by this fund manager is personally meeting all members of the management team for selected stocks on a regular basis, preferably at their own premises.

Charges

The fund has a 4.00% initial charge and a 1.5% annual management charge, with a total expense ratio (TER) of 1.65%.

For the BrilliantWithMoney SIPP, this initial charge is discounted to 0.25% and the annual management charge is discounted to 0.75%.

Conclusion

This is a fund where the manager is prepared to take a contrarian view and find stocks which are out of favour with over investors. There is reasonable diversification within the fund, with the portfolio selecting stocks which are unloved, stabilising, recovering well and mature companies. It has delivered strong consistent performance over an extended period of time.

The low portfolio turnover rate keeps total expenses reasonably low quite a specialist fund. This is a big fund, with over £4bn of assets under management, but manager Tom Dobell copes well with this level of cash to invest and there are no signs that he is struggling as the fund continues to grow.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice.

The small but important print: This article was produced for information only and should not be considered a recommendation to buy, sell or hold a particular investment fund. Seek advice from a professional independent financial adviser before making a decision. The performance data in this article was provided by Financial Express and was correct as at 21st October 2009.