PA ANALYSIS: Is Wood leaving JOHCM UK Opps in equally cautious hands?

Added 15th March 2017

As John Wood prepares to pass his £1.8bn JOHCM UK Opportunities Fund from his cautious hands into those of his two co-managers, fund selectors are relieved to hear of a fair succession plan.

PA ANALYSIS: Is Wood leaving JOHCM UK Opps in equally cautious hands?

Renowned for his defensive quality, value-conscious sensibility, Wood will fully hand the reins to his co-managers Rachel Reutter and Michael Ulrich at the end of September as he retires from the industry altogether – aged just 51. Lucky man.

Is he lucky, or skilled?

He has been compared to Neil Woodford, with his long-term, defensive quality holdings, the highest ‘risk’ - if you can even see it as such – being the concentration of his portfolio, with just 26 holdings at end of January.

It puts Reutter and Ulrich under slightly greater pressure, as if they change just one holding after October it will have a significantly bigger influence than in a more diversified fund.

Having such a high-conviction, defnsive approach means Wood underperforms at times but tends to outperform in falling markets.

"His high-conviction defensive approach has seen Wood outperform in falling markets"

He is also not averse to holding high cash levels if he fails to see companies at the right valuations, and is currently around 25% in cash - a stance he has held since 2012.

 

FE analysis says of Wood: “Overall, performing better than the peer group composite. However, over a long track record, the manager has, period by period, over- and under-performed roughly equally.

“Good stockpicking has had a material positive impact on results, which have tended to be relatively better in a falling market.”

Darius McDermott, managing director at FundCalibre, which holds the JOHCM UK Opportunities on its Elite list, says for a good, solid UK core holding, Wood is a safe bet.

“He has a value tilt but not deep value – he just won’t overpay for companies - so when there is a big value rally, he will underperform.”

While at the time of writing McDermott hadn’t had time to reconsider the rating, or arrange to meet the co-managers, he was confident in the group’s plan, adding it didn’t come as a surprise.

 

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