Investing in the UK has often felt thankless over the past eight years. Our domestic stock markets have underperformed since 2016 as global investors have found more enticing alternatives. Our approach in the Rathbone UK Opportunities Fund has been to assess what sorts of characteristics are common to the names these global investors have been seeking, and to see if we can replicate them here. We often discover that similar businesses trade on a postcode-driven discount.
We aim to buy quality businesses that are growing well at reasonable prices. By “quality”, we mean companies that consistently make profits well above expenses with little borrowing. Another factor we search for is higher-than-average profit growth.
These characteristics tend to be highly sought after, so the trade-off is that our fund’s stocks generally trade at prices that are higher as a multiple of profits than the market as a whole. Our portfolio…
