Citywire printed articles sponsored by:
View the rest of this gallery online at http://citywire.co.uk/new-model-adviser/gallery/a698926
Funds for all seasons: 10 stellar investment picks
by Matthew Goodburn on Aug 21, 2013 at 16:26
Here we highlight 10 of Citywire Selection's 20 highest conviction fund picks. Click through the gallery to see star picks from the Asia Pacific, absolute return, European equities, mixed assets and global emerging markets sectors, and why they were chosen. We will run through the rest of the 20 next week.
Blackrock European Dynamic
Alistair Hibbert is one of the best managers in the sector, and investors have been handsomely rewarded with excellent risk-adjusted returns on this fund. We back this to continue. The portfolio is fairly evenly split between defensive sectors and more cyclical ones. Hibbert is astute at adjusting this combination, and is currently backing consumer areas and healthcare.
Ecclesiastical Higher Income
Fund manager Robin Hepworth is arguably the most consistent mixed asset investor. This fund has always been among the best of its peers by blending together traditional UK equities and fixed income, with a small allocation to international equities.
Asian equities in particular have helped it to deliver strong returns, and shrewd choices in high yielding UK stocks and corporate and government debt have added value. Hepworth has also started to add to his allocation in European equities.
This is a good choice for long-term investors.
First State Greater China Growth
Fund manager Martin Lau is the most consistent investor available to UK investors wishing to invest in the Greater China region.
His bias towards steady companies with strong governance significantly reduces the volatility of the investment compared with his peers. The fund does not catch all of a rally but will almost always be the best when the market falls on hard times, taking the edge off what is an exciting but risky region.
This is not to be confused with a China-only fund and, while it does invest directly in China, the bulk of the investments are in Hong Kong and Taiwan. Performance for the region has far outstripped that of the mainland in recent years and despite signs that may change, Lau is still cautious on direct investment into China.
There is an initial charge to this fund but, considering its strong performance and lack of competition, we think it is justified.
First State Asia Pacific Leaders
Angus Tulloch & Alistair Thompson
Angus Tulloch and Alistair Thompson’s philosophy of selecting quality companies has resulted in them continuing to deliver positive returns with this fund and add value in a difficult period for Asian equities.
The managers are consistently the least volatile investors in Asia, yet not at the cost of returns. In good periods they will lag behind but they leave all in their wake during bad periods.
They are currently bearish on Chinese prospects and wary of the region’s buoyant property market. They have their highest ever weighting to Indian companies, where they are able to buy quality at the right price. They are among the best Asian investors we track and the fund is one to back in all climates.
Invesco Perpetual Monthly Income Plus
Paul Read, Paul Causer & Neil Woodford
They believe core government bond markets offer limited value but have a significant position in bank bonds. This is a risky part of the market but investors have been rewarded and should anticipate a more volatile ride than with our other strategic bond picks.
The 20% equity position, managed by veteran investor Neil Woodford, gives exposure to solid blue chip equities such as pharmaceutical giants GlaxoSmithKline and AstraZeneca, and the fund yields around 5%.
JPM Emerging Markets
This fund is an effective way of gaining exposure to some of the fastest-growing economies with a focus on quality businesses.
Manager Austin Forey continues to overweight consumer staples and tends to underweight utilities and healthcare. He went overweight in China for the first time in 18 years as the Chinese market reached new lows in 2012 but has since reduced his exposure to around its benchmark levels.
The fund is benchmark aware, but we believe it is more attractive than passive funds, which naturally lag behind the index.
Aberdeen Asia Pacific & Japan
Hugh Young’s pan-Asian portfolio has a large underweight to the region’s dominant equity market, Japan, at only 20% of the fund, and this has affected recent performance.
Young favours the other developed economies of Hong Kong, Singapore and Australia, which make up around half of the fund. He balances this with investments in some of the more volatile countries in the region, such as Thailand, India, China and Malaysia.
Curiously, he is significantly underweight South Korea, with only the ubiquitous Samsung present in the portfolio. This is a defensively minded way to access the whole region.
M&G Optimal Income
This fund allows manager Richard Woolnough to invest in all parts of the bond market and we rate him as one of the best in the UK. He is notably backing corporate bonds and only has a small allocation to banks, which he deems too risky. He increased his high yield position at the halfway point of the year following their sell-off.
Up to 20% of the portfolio can also be invested in equities. This is currently at around the 12% mark and made up of blue chip companies whose shares offer a more compelling yield than their bonds.
Ruffer Investment Company
Steve Russell & Hamish Baillie
The multi-asset approach of this investment trust, run by Steve Russell and Hamish Baillie, has been an exceptional performer over the past decade.
However, the weakening yen towards the end of last year and into 2013 has started to be extremely positive for this position. If the currency continues to weaken, it will be good for both Japan and the companies in the portfolio.
The team has recently been rotating the portfolio to a more cautious stance and locking in some of the gains.
The approach might suffer the occasional blip but the fund is near the top of the rankings over five years.