‍

Under a grey sky, my car shaking apart on the roads of Gloucestershire on my way to see a client and having failed to connect to a fund manager podcast I was keen to listen in on due to the appalling connectivity of mobile signals, one can quite understand why there is a continued gloom over the prospects of UK Ltd. Not so however in the camp of Law Debenture, the Investment Company that has recently celebrated 135 years of existence.

‍

Law Debenture is 80% an investment management company and 20% a professional services business that generates around a third of the dividend payable to shareholders. This allows the investment managers, James Henderson and Laura Foll to seek-out growth orientated companies in the knowledge that the desired income yield is covered.

‍

We met with Laura recently. The fund delivered +15.9% in 2024 and over five years is the best performing UK Equity Income fund in its sector, a period that has delivered around +12% p.a. to shareholders. They are proud to have maintained or raised their dividend consistently for 45 years helping to reduce income volatility, an important feature we sought in the development of EXE Capital’s Income strategies.

‍

Large UK companies such as Rolls Royce and M&S have led returns in the fund, but now Laura believes that UK smaller domestic companies, those that sit within the FTSE 250 index and have been unloved post Brexit, are about to have their day in the sun. Seeking out the winners of tomorrow is part of their mandate and as a result they are now overweight UK domestic firms. It may seem like a contrarian play but that’s precisely why we chose these managers – to back their convictions and embrace a differentiated approach.

‍

James Henderson has run the mandate for 20 years and the fund has delivered +677% over that time compared to the FTSE AllShare index return of +282%. It is the only fund in its sector to be trading above par which has allowed them to issue over £100m of new shares recently. The fund is currently valued at £1.79 billion.

‍

Laura is bringing out the optimist in me.

‍

Comments from James Scott-Hopkins, Founder, EXE Capital Management

‍

The views are those of the author only. The above does not constitute a recommendation to buy the fund and advice should be sought from your financial advisor as to the appropriateness of this fund in your portfolio. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.

‍