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5 Minutes with Franklin Templeton’s Richard Bullas

Richard Bullas, manager of the Bronze-Rated Franklin UK Smaller Companies fund, reveals why he likes unloved UK small-caps and a childhood dream of becoming a pilot

Annalisa Esposito 8 November, 2019 | 12:55AM

Richard Bullas

Richard Bullas has co-managed the Franklin UK Smaller Companies fund with Paul Spencer since 2012. One of the best performing Morningstar-rated funds in October, the fund has produced annualised returns of 11% over three years and is up 16.6% to date. Top holdings include camera-maker Vitec Group and Entertainment One, the firm behind much-loved children's character Peppa Pig. 

What does the fund do?

Invests in around 40 to 50 companies with the aim to grow in value by more than the Numis Smaller Companies Index over a three to five-year period.

What’s the biggest challenge in this asset class?

The main ongoing challenge for domestic companies is the political situation; the big cloud called Brexit creates lots of uncertainty and smaller companies are currently at a big valuation discount compared to the rest of the market.

And the biggest opportunity?

I really think that when we get some clarity with the political situation the small-cap market will start to outperform, as confidence will come back to the UK market and investors start investing again. 

What's a stock in the portfolio you’re excited about?

DiscoverIE (DSCV), an electronics designer and manufacturer that sells its products in growing markets such as the medical and renewable energy - that gives it a great outlook. It has also a strong track record and is the third biggest holding in the fund. 

What's your best ever investment?

Seven years ago I invested in Avon Rubber (AVON), and its shares went up from £3 to £18. The company has two divisions: one sells products in the dairy industry, such as milking equipment, and the other sells respiratory protection equipment to the army. 

And the worst?

Coffee and cake shop Patisserie Valerie. About a year ago, it was victim of fraud - which meant the company went in administration and we lost all our investments. It’s very rare to be involved in such situations but it can happen.

Which stock you didn’t buy and you wish you had?

In the small-cap universe you often find stocks that have strong performance and Games Workshop (GAW) is one of them. They're a manufacturer of miniature war games and the new management team has been reinvigorating the business. They went up from £5 to £45 in four years. I am very disappointed we didn’t buy it.

What’s your favourite thing about the industry?

As a small-cap manager, the biggest excitement is meeting with different management teams. The real joy for me is sitting down and talking business with the senior managers of different companies and discussing opportunities with them.

And the worst?

When an investment does not turn out the way you hoped. There is the risk of losing lots of money within small caps and avoiding this is in our priority list. I take it very personally when we lose money as I invest in the fund as well.

What do you in your spare time?

My wife, two children and the dog keep me busy. I also enjoy football and we are renovating the house as well, so I paint and decorate when I have some spare time.

If you weren’t a fund manager…

My childhood dream was to be a pilot. I have a big passion for aviation and for a long time during my teen years I wanted to be one. I tried to get onto a pilot training scheme but unfortunately I didn’t get through. If I had my time back again I would push very hard to be a pilot and travel the world.

What would your last meal be? 

My wife’s roast dinner, with all the trimmings, followed by sticky toffee pudding – I have a bit of a sweet tooth.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk

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