An Opportunity knocks as Axa stalwart retires

THERE is a changing of the guard at one of Axa’s biggest investment funds.

At the end of the year, Nigel Thomas, longstanding manager of the £2 billion Axa Framlington UK Select Opportunities fund, will make way for Chris St John.

It will bring to an end a near 40-year career in the City for Thomas who started back in 1979 with investment house Carrington Pembroke and has spent the last 16 years with Axa.

Although Thomas’s departure could unsettle some fund investors and financial advisers, St John states that there will be no ‘big bang’ once he takes over. It will be ‘business as usual’, a seamless changeover, with little alteration to the fund’s holdings. This is because St John has been Thomas’s deputy on the fund for the past five years and knows the portfolio inside out. ‘Nigel sits next to me,’ says St John, ‘and I have acted as an extra pair of eyes and ears on the fund for him.

‘We have constantly exchanged ideas, had a good dialogue and when one of us has gone on a company visit, we have always discussed the results.’

As well as taking over the reins at UK Select Opportunities, St John will continue to run the Axa UK Mid Cap he has managed for the past seven and a half years. Over the past five years, this fund has outperformed UK Select Opportunities with respective returns of 34 and 15 per cent. The objective of UK Select Opportunities is a simple one – to generate long-term capital growth for investors from a portfolio of UK shares. The shares can be FTSE 100 listed or they can be FTSE 250 or Aim. Currently, more than 40 per cent of the portfolio comprises mega stocks such as Royal Dutch Shell, GlaxoSmithKline and BP.

No one can dispute that Thomas has fulfilled the fund’s objectives, comfortably outperforming the FTSE All-Share Index since September 2002 (a 377 per cent return compared to a 241 per cent increase in the FTSE All-Share).

Yet the past five years have been more challenging with the fund underperforming the index. Despite this, St John says the focus will remain on finding businesses that can grow their revenues over the long term – the heartbeat of what Thomas did for 16 years.

St John says relatively recent additions to the portfolio – such as investment platform AJ Bell, thread manufacturer Coats and surgery equipment specialist Creo Medical – all fulfil this criteria. Thomas officially retires on March 29, the day the UK is meant to leave the European Union and just after his 64th birthday. ‘The timing wasn’t intentional,’ he says, ‘or me making a statement.’

With 80 per cent of his pension tied up in UK Select Opportunities, he will watch St John’s progress keenly. Yet Thomas believes that tricky times lie ahead for all equity investors as a number of negatives – Brexit, the prospect of a government led by Jeremy Corbyn, trade wars and higher interest rates – feed into stock market uncertainty. ‘Amber lights are flashing,’ he says.

UK Select Opportunities is a good option for investors wanting exposure to the UK stock market. But this is a fund that best suits investors who are prepared to invest for the long term – preferably ten years plus. It should represent no more than five per cent of an investment portfolio.