Fund of the week: a consistent outperformer
Fund manager Dan Nickols’s financial career didn’t get off to a promising start. He took a degree in modern and medieval languages at Cambridge University, then failed in his first career as a chartered accountant. So potential investors may well ask, as Mike Collins does on Yourmoney.com: “Would you trust your money with this man?” But anyone who has done so in recent years won’t have regretted it.
Nickols has just been picked out as the UK’s most successful fund manager over the past three years by Citywire. His fund, Old Mutual UK Select Smaller Companies, returned 159.4% over that time, compared to 93.4% for his benchmark. As one city analyst puts it, when it comes to fund managers, “it doesn’t really matter what their background is as long as [they] can do the job consistently well”.
One reason for his success is that, unusually for a self-styled stockpicker, Nickols doesn’t ignore larger economic trends. In 2004, he was overweight in industrials and fund managers, he tells Citywire, but moved into less “economically sensitive” stocks in 2005 and 2006. A flexible approach also helps. “We don’t pigeonhole ourselves,” he tells The Mail on Sunday. “There’s no emphasis, for example, on growth investments or value investing.”
The downside to his success is that Old Mutual has taken the opportunity to put the fund’s annual management fee up to 1.75% from 1.5% – so Nickols will have to work extra hard to make sure his fund keeps on beating the market after the extra charges are included.
Old Mutual UK Select Smaller Companies top holdings
Name of holding % of assets
Southern Cross Healthcare Group 2.70%
Chemring Group 2.60%
Expro International Group 2.50%
WSP Group 2.10%
AVEVA Group 2.00%
Kier Group 1.90%
Severfield-Rowen 1.70%
ITE Group 1.60%
Connaught 1.60%
Speedy Hire 1.60%
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