Cape Wrath Capital is offering to refund the annual management charges on its UK value fund for a year as a thank you to investors who have stuck by it during a challenging run for the investment style.
The Wales-based boutique said the AMC on its VT Cape Wrath Focus Fund will be fully rebated for all existing and new investors in the GBP A share class from 1 April 2021 until 31 March 2022.
Launched in 2016, the high-conviction value style fund was one of the worst hit IA UK All Companies funds during the initial coronavirus sell-off, losing 42.6%, as cyclical sectors like construction, retail and travel and leisure were disproportionately hit.
But over the past several months it has seen a massive turnaround in performance as positive developments around the global vaccine rollouts have sparked a cyclical recovery.
The £6.5m fund is now first quartile over one and three years compared with peers in the sector, having delivered 84.1% in the 12 months to 25 March 2021. This is over three and a half times higher than its benchmark the MSCI UK IMI net dividends reinvested (23.5%).
“Investors have demonstrated their commitment to us through a long, challenging winter for UK equity value strategies,” said Cape Wrath Capital investment director Adam Rackley.
“To show our gratitude to them, we are rebating the annual management charge for one year.”
Tide is turning for single-strategy boutiques
With the beginnings of a cyclical rotation underway Rackley said investors are beginning to re-think their portfolios and how they are invested.
“Boutique asset managers have long been disadvantaged alongside their better known, better marketed, bulge bracket cousins,” he said.
“However, we can see that the tide is turning as investors become increasingly aware of the performance premium gained by investing in well-aligned, single strategy firms, that offer differentiated approaches and strict capacity limits.”
He added the risk/reward asymmetry in the UK value market “is as attractive as we’ve ever seen it”.
The fund’s cash position which was 41% on 31 January 2019 was just 9% at the end of February.
While the AMC rebate is on offer, VT Cape Wrath Focus’ ongoing charges figure of the GBP A share class will be capped at 40 basis points and will fall as assets increase.
Rackley said if assets under management hit £50m this would correspond to an indicative OCF of 12bps.
