JO Hambro fund manager's top 15 stocks

Alex Savvides, manager of the JO Hambro UK Dynamic fund, shares his investment strategy and top stock picks.

The £97 million JOHCM UK Dynamic fund has outperformed the FTSE All-Share Total Return Index (adjusted) by 36.2% on a geometric basis since its launch on 16 June 2008, to 30 September 2013, giving it a top-decile ranking within the IMA UK All Companies sector (source: Lipper).

The top ten stocks in the portfolio include BP, Vodafone, HSBC, Royal Dutch Shell, 3i, GlaxoSmithKline, Tesco, Qinetiq, AstraZeneca and Segro.

The manager recently added construction company Balfour Beatty and AIM-listed healthcare outsourcing business Clinigen. Other stock ideas over the past 12 months comprise Aviva, Robert Walters and National Express amongst others.

Savvides says every stock held within the UK Dynamic portfolio must pay a dividend or be expected to do so on a prospective basis. The fund had a historic yield of 3.3% ('B' accumulation share class) as at 30 September 2013. Due to the combination of strong performance and an attractive yield this resulted in sizeable inflows into the fund over the past 12 months.

Over one year, the fund has returned 33.6% compared with 26.2% of the UT UK All Companies index as at 24 October.

Savvides says: "Valuations remain generally attractive and corporate balance sheets are in good shape. Markets have been worried by the prospect of tapering, but this is only indicative of a normalisation in economic conditions.

"With the macro obsession of investors dissipating over the past year and market trends supporting a disciplined bottom-up approach, there are huge opportunities for this type of strategy."

The manager's investment philosophy is change and the belief that the stockmarket consistently overlooks how companies change to meet dynamic market conditions.

Savvides says: "Our investment process aims to profit from understanding corporate change, in whatever form it may take, and investing where there is the highest probability of success but with the highest cash-based valuation support. This means we invest with patience in a mixture of high-quality, unloved and under-researched companies and often in out of favour areas of the market."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.