As a ‘thank you’ to VT Cape Wrath Focus Fund investors, Cape Wrath Capital, the Wales-based value boutique, as sponsor of the VT Cape Wrath Focus Fund is to refund the annual management charge on the GBP A class of the high conviction UK equity fund that it advises.
The annual management charge will be fully rebated for all existing and new investors from 1 April 2021 until 31 March 2022. Adam Rackley, investment director at Cape Wrath Capital, explained the decision: “Investors have demonstrated their commitment to us through a long, challenging winter for UK equity value strategies. To show our gratitude to them, we are rebating the annual management charge for one year,” said Mr Rackley.
He outlined a sea change he was seeing in the market as investors reassessed their portfolios and the wide range of options available.
“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, singlestrategy firms, that offer differentiated approaches and strict capacity limits.”
The fund has a ‘value’ style and uses the MSCI UK IMI net dividends reinvested as its benchmark. It is in the Investment Association UK All Companies sector. Over 12-months to 25 March 2021 the fund has returned 84.1 percent and the benchmark has returned 23.5 percent. Mr Rackley said the current environment showed great promise for UK value strategies.
“The risk/reward asymmetry in the value corner of the UK equity market is as attractive as we’ve ever seen it, offering a once-in-a-lifetime opportunity to buy decent businesses at bargain prices, supported by earnings upgrades,” said Mr Rackley. “As a result, the fund’s cash position, which falls as opportunities become more plentiful, had dropped from 41 percent on 31 January 2019 to 9 percent by 26 February 2021.”
For the duration of the annual management charge rebate, the ongoing charges figure (OCF) of the GBP A share class will be capped at 40 basis points. This figure will also fall as assets increase. For example, should the fund reach an AUM of £50 million, this would correspond to an indicative OCF of approximately 12 basis points.