Carl Stick’s entry into fund management was completely by chance – he responded to an advert for a graduate job in a local stockbroker in Kent, working on the private-client side, and got the job. Eighteen months later, after the firm had been acquired, he moved into the firm’s “very nascent” unit trust business, which the firm had set its sights on expanding.
“That was August 1998 and the first time I got involved with fund management,” Stick tells Portfolio Adviser, “and it was only around 16 months later that I was asked to look after the company’s income fund, which was £9m in assets at the time.”
This year, Stick celebrates 25 years of running the Rathbone Income fund with assets now sitting at about £600m. “It used to be a tiny fund, very much out of the public gaze. But I was fortunate to take it over then, a lot of it happened by chance.”
See also: Rathbones’ Coombs: ‘We won’t be following the ‘hot’ investment flows into Europe’
When Stick is asked about his career highlights from over the past 25 years, he points to this time when he first started. “When we were very small, and I could just get my head down and do one thing away from the microscope of the markets – that was terrific. Those first few years of looking after the fund were wonderful.
“But looking at where we are now, another highlight would be how proud I am of the business we have built up. A lot of us have been here 20-odd years and I am proud of what we have done together.”
Stick runs the fund with co-manager Alan Dobbie, who has been at Rathbones for 20 years. Fellow fund managers Bryn Jones and James Thompson have also served 20-plus years at the business, while David Coombs has been at the firm for 18 years.
Sustainable dividend growth
Stick acknowledges the £600m in assets the Rathbone Income fund now holds, while a healthy amount in a highly competitive sector, is lower than its peak of £1.4bn. “Investors have fallen out of love with UK equities,” he explains. “But it is swings and roundabouts.”
So, what does this fund do that sets it apart for investors seeking UK equity exposure and a regular income?
“We are aiming for every one of our businesses to deliver a dividend that is sustainable and can be grown. If every business is doing that then we are most of the way there,” he says.
See also: Columbia Threadneedle UK distribution co-head joins Rathbones
“When we are considering companies, we look at cashflow and returns on the investments they are making.
We want to see they are generating cash profits. We are tipping our hat to quality businesses that can maintain and grow earnings.”
The fund has around 40 stocks (“that’s not a hard and fast rule but where we’ve been for the past 10 years”) and Stick points out the turnover of stocks in the portfolio has slightly increased over the past few years due to the trading environment.
“Historically, our holding period has been about five years, but over the past few years that is now around three years, probably because we have been managing overall risk within the portfolio, and trading out a little more frequently than we might otherwise have done.
“It’s recognising that we don’t want to build up prices within the portfolio.”
Read the rest of this article in the May issue of Portfolio Adviser magazine