MIDAS SHARE TIPS: Miton’s in pole position when Brexit clouds lift

Speeding ahead: Investment manager Miton has a European Opportunities fund holding shares in Ferrari

This time of year is traditionally one of the busiest periods in the investment calendar – when savers are opening or topping up Isas to maximise tax breaks, as the financial year draws to a close.

Brexit worries have muddied the waters slightly this year, with many investors too uncertain about the future to salt away hard-earned cash. Even so, fund managers are working hard, including Miton, a small investment management company that prides itself on being different from its rivals.

Miton shares are 55p and should increase in value as the firm expands and dividends rise. The stock should also gain ground when the Brexit clouds finally lift and market sentiment recovers.

Speeding ahead: Investment manager Miton has a European Opportunities fund holding shares in Ferrari

Miton was founded in 2001, but the business over-expanded and went through a rough patch following the financial crisis. New managers were parachuted in, giving the group a new lease of life and a fresh direction.

Today, the company is well-run and fast-growing, with a selection of top-performing funds and a group of highly committed directors and fund managers.

Chief executive David Barron took the helm two years ago but has spent almost four decades in the fund management industry, including stints at some of the best-known names in the sector, such as JP Morgan, Hambros Bank and Merrill Lynch.

Senior director Gervais Williams has 33 years’ experience in the industry and co-runs the group’s largest fund, Miton UK Multi Cap Income, which looks for generous dividend payers across the London market and has consistently outperformed its peers.

Williams owns almost 9 per cent of Miton shares so he is incentivised to succeed, along with his partner on the Multi Cap fund, Martin Turner, a near 7 per cent shareholder.

European Opportunities is another top-ranking fund in Miton’s stable. Having delivered superior returns since it was launched, the fund includes Ferrari as one of its top shares.

For Barron, this exemplifies Miton’s distinctive approach. Describing itself as ‘genuinely active’, Miton does not follow the herd, focusing instead on selecting stocks with fundamental growth and income prospects.

This is particularly significant today, as more savers migrate to low-cost, passive funds, which simply track stock market indices. Many active fund managers are struggling in response, as they try to prove that the extra fees they charge deliver better returns to investors.

Miton, however, has been drawing in new customers thick and fast, attracting more than £1 billion of new money last year. Assets under management rose 30 per cent to almost £4.4 billion.

Profits for 2018 rose 34 per cent to £9.2 million, and the dividend has risen by 43 per cent to 2p, with investors who buy Miton shares now eligible to receive it.

In a sign of confidence in the future, Barron is introducing an interim dividend payment this year too.

Looking ahead, the company is expected to grow by attracting new investors and launching new funds. In the past two years alone, Miton has launched three new funds, including one dedicated to smaller companies in the US and another focused on global infrastructure.

The group should also benefit when UK investors begin to feel clearer about the future and return to the stock market.

Longer-term too, there are grounds for optimism. People are growing older, they need to save more for retirement and a business offering active management that delivers results should attract savers’ cash.

Midas verdict: Miton shares were trading at more than 70p last summer but have fallen back to 55p, amid persistent stock market nervousness. The fall is overdone and the stock should recover. Miton pays a decent dividend too. Buy.

Traded on: Aim; Ticker: MGR; Contact: mitongroup.com or 020 3714 1500 

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