From £500,000 to a £300m fund . . . meet the Northern powerhouse
COLIN Morton has spent more than 22 years managing money for investors.in But unusuallyunu for a fund boss, he hasha kept well away from the City, preferring instead to take a more detached view of equity markets from the Northern boltholes of Huddersfield and Leeds.
The 51 year old has experienced it all – crashes, bull runs, the bursting of the tech bubble in 2000 and the 2008 financial crisis. Throughout, he has stayed calm and loyal, even when his employers have changed as a result of takeovers and mergers.
Morton still runs the unit trust he took over in 1995, when it had assets of no more than £500,000. The name has changed several times but the fund, now called Franklin UK Equity Income, has assets in excess of £300million and has acquired a record for delivering a steady combination of capital and income return.
Since taking over, Morton has generated an annual overall return of 9.4 per cent. It is a record he is proud of, as is the fact that he has helped build a six-strong investment team responsible for managing £2billion of investments for US asset management giant Franklin Templeton. The team is based in Leeds, with Morton commuting from Harrogate.
He says: ‘Between us we invest in some 150 stocks across six funds. We invest only in UK equities, don’t buy derivatives and will not short stocks in the hope of making money from falling share prices. We have stuck to our knitting throughout. We’re UK through and through.’
The Franklin UK Equity Income fund is conservatively run. Morton has stakes in about 50 firms committed to paying dividends. No holding makes up more than five per cent of the fund, so protecting investors from stock-specific risk. The fund is built heavily around dividend-friendly shares in the FTSE100 Index, such as tobacco giant BAT and consumer goods group Unilever. Morton likes utilities and pharmaceuticals.
Though income is an overriding objective – he will not invest if a firm does not pay a dividend – he is always looking for investment opportunities. For example, firms whose shares have been pounded but which remain strong businesses.
‘The Brexit vote provided lots of opportunity,’ says Morton. ‘Shares in some companies fell sharply in the wake of the vote, such as plastics specialist Victrex, landscape products group Marshalls and engineer Bodycote. We bought into them because they remained fundamentally good businesses.’
He has sold out of Marshalls, but continues to hold Victrex and Bodycote. He says some consumer stocks, in particular retail and pubs, now look ‘cheap’, though he will not reveal which purchases he has made.
Morton and his team were bought from Investec six years ago after the wealth manager decided to shed its Rensburg funds arm. As is its way, Franklin has adopted a hands-off approach, allowing Morton and his team to carry on as normal while providing marketing backup and access to research when needed. Assets managed by the Leeds team have more than doubled since Franklin took over.
The best fund from the Leeds stable has been Franklin UK Managers’ Focus. Over the past five years, it has produced an overall return of 95 per cent, against 70 per cent from UK Equity Income.