The flagship fund in HL’s select series, which launched earlier this month and raised £168m, centres around the group’s favourite growth stocks and aims to give investors greater transparency about what is happening to their money.
The first major underlying theme in the portfolio is what Clayton terms “tech in disguise.” While companies like Autotrader, Rightmove and Just Eat are officially lumped into the media, leisure or food service sectors, “they are all distinguished by the way they have adopted the possibilities of online communications to transform their industries,” said Clayton.
Equally, this theme applies to the fund’s latest purchase – Domino’s Pizza. The American pizzeria was a pioneer in developing its online takeaway capabilities from scratch, making it an attractive holding, Clayton asserted.
“Domino’s Pizza was the takeaway chain that did it the hard way, building its own website and apps when rivals had no online order channel at all. They now dominate the pizza sector and receive the majority of orders online.”
Industry dominance is also a prominent theme of many of the growth stocks in the Select UK Shares portfolio. Like Domino’s, Clayton sees Autotrader, Rightmove and online used-vehicle trader BCA Marketplace as some such prominent players in their respective niche industries.
He has added BCA to the fund recently, banking on its dominant position in a marketplace that is unlikely to see new entrants. “Their British Car Auctions business controls the majority of car auction sites in the UK,” he explained. “With few new sites likely to come along in future (auction buyers like to get lots of choice, new sites have little volume to attract the buyers with), they should be able to exploit their position over many years to come.”
Clayton also remains enthusiastic about holding consumer giants in the fund, such as Unilever, Reckitt Benckiser and Diageo.
