Portfolio Adviser • Portfolio Adviser May 2025 • Fund manager profile

Carl Stick tells Natalie Kenway why he’s still excited to manage the Rathbone Income fund 25 years into his tenure and how he uses long- distance running to gain focus and perspective on both his life and career

Cari 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.”

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 high- light 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.

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.

“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.”

From a practical level, Stick and Dobbie split certain tasks in the management of the fund – Stick says his co-manager “is a lot more on the day-to- day work of the fund”, while he himself is “more involved in the strategic side”, but overall they have a balanced approach to stock decisions, while also retaining the right to challenge each other – but this is rarely needed.

“I might be the more emotional one, he is the more logical one. I will get excited about something, and he will make sure we don’t get ahead of ourselves. We do work very well together, and rarely disagree on anything. We have the right to veto stocks, but it has hardly ever been used.”

Stick also notes Keval Thakrar’s contribution to the equity income team as an analyst, carrying out fundamental analysis on the fund’s existing holdings and screening new opportunities.

“We give him free rein, he knows what we’re looking for and knows our risk framework, we’re all very clear on what we’re trying to achieve. He is not going to come to us with something that blows that out of the water.”

Over the past five years, the fund has slightly outperformed the IA UK Equity Income sector returning 61.2% on a cumulative basis to 28 April. The sector returned 61%, according to FE Fundinfo. The dividend yield on the I class income units was 4.59%, as at 31 March, according to Rathbones.

In a February update, Stick talked about positioning the portfolio in quality growth stocks and domestic earners last year that was perhaps a little too early, by his own admission.

“We positioned the fund in a certain way, we were early so we were wrong at that time. We reassessed and have focused on being more defensive and stuck to sustainable earners and domestic plays based on what we felt was people being too gloomy about the UK and its economic prospects, and valuations are dirt cheap.”

He acknowledges the market turmoil as a result of US president Donald Trump’s tariff announcements has been “very difficult for a lot of people” but adds the fund has held up well in relative terms.

“We’re quite comfortable with that defensive positioning and focus on UK domestic earners – it turned out it was the right place to be. We weren’t predicting the events of recent weeks, but we were worried about a complacency around US exceptionalism.”

Trump’s moves could actually be a good thing for the UK market, he adds. “The catalyst for the UK market has actually come from overseas, instead of it being our new UK government last year. Trump has shaken up the market, and this has reinforced in our minds the view that maybe the UK is not as badly positioned as people were saying. I think it has started to come our way.”

The fund’s biggest positions are in National Grid, Legal & General, GlaxoSmithKline and AstraZeneca.

“We are talking defensive, stable names that tend to be larger-cap businesses such as the pharmas and utility companies.

“Our most consistent performer of the past three years is BAE Systems. We don’t really like talking about it as it is involved in creating weaponry, but the harsh reality is the world has changed and we need to think more about security and defence spending – this year it has become even more of an issue.”

Stick adds property companies and super- markets such as Tesco and Sainsbury’s have been among the fund’s highest yielders, and there are some new opportunities they are perusing.

“We not yet in the teeth of the storm but when things begin to settle and you start looking at businesses with 6, 7, or 8% dividend yields, we might be paid to take that risk. There’s a lot we can do, I am excited about it.”

As Stick looks ahead with optimism, we ask him about the ultra-marathons and triathlons he participates in, and how this has helped his fund management career. He says it provides him time to think and gain perspective.

“The last race I did a few weeks back was 50km and it took six-and-a-half hours. That is a lot of time in my own head thinking about stuff. I am curious about lots of different things, I like learning and I listen to podcasts while running.

“The other thing is perspective. I had a few very close friends who passed away too early in life through cancer and the events we do raise money for Prostate Cancer UK. The longest event I did was 26 hours. What got me through it was thinking about my friend who woke up each day believing every- thing was fine and then remembered he had stage- four cancer. So I turn around my thinking; once this is over my life will be well again.”

Also outside of work, Stick and his wife foster rescue dogs – they have eight at home at the moment – and volunteer at animal sanctuaries.

But nothing is off the cards for the future in and outside his fund management career, and he encourages everyone else to have a similar mindset. “Why not aspire to achieve anything, whatever age you are? You can do anything you want.”

Carl Stick has managed the Rathbone Income fund since 1 January 2000, having joined the company in 1998. He is one of the longest-serving managers in the UK equity income sector. He has spent two decades holding executive roles within Rathbones Asset Management, and was closely involved in the creation and evolution of the team’s investment process.