Citywire Selection: our top global equity fund picks
Stephen Docherty has been warning since 2010 that growth estimates are too optimistic and he remains in cautious mode. Diversification across countries means nearly a quarter of the fund is invested in the US followed by the UK, Switzerland and growth areas in Asia. Portfolio turnover is low but he is still keeping an eye on new opportunities where strong cash flows are crucial. The fund outperforms in falling markets but may not to keep up during strong rallies.
Over five years to the end of October, the fund has returned 25.1% compared to 15.3% by the FTSE World index.
The value style, which is strictly followed by manager John Pennink, has been out of favour with stock markets. This, along with exposure to European conglomerates has contributed to underperformance. We have decided to put the trust Under Review as we monitor developments. Its discount has widened and Pennink thinks the sum of the parts of companies held is materially undervalued. Investors will require patience to unlock the potential and a turnaround in Europe will be key to boosting performance, making this a real contrarian play.
Over five years to the end of October, the fund has lagged the FTSE World index, returning 3.4% compared to 15.3%. The trust is currently trading on a 11.4% discount and the NAV is up 4.9% over five years to the end of September.
Robin Hepworth has had a high cash position for a few years but is now finding opportunities to reduce this as valuations fall. Around a quarter of the fund is invested in Asia which has started to cancel out recent underperformance caused by a huge underweight to the US. While remaining bearish, Hepworth is backing Asia’s long term potential and prefers areas with well capitalised banks meaning the US makes up less than 10% of the portfolio. More recently, his mid-cap Asian stock selection has been working well.
Over five years to the end of October, the fund has returned 19% compared to 15.3% by the FTSE World index.
Mark Urquhart buys the companies he thinks are best placed for long term growth. This means large positions in a raft of US tech stocks and a pro-growth stance that means the trust will rally strongly in helpful markets but is likely to underperform in weaker ones. The discount has swung widely of late, so keep an eye on this for an entry point you are comfortable with.
Over five years to the end of October the trust has returned 11% compared to 15.3% by the FTSE World index while NAV is up 12.8% over the five years to the end of September. The discount is currently 11%.
This fund of funds is managed by John Chatfeild-Roberts, Peter Lawery and Algie Smith-Maxwell and has generated strong long term outperformance. With so much global uncertainty, they are sticking to a mix of defensive managers and pockets of growth such as Asia and a 5% position in Latin America. Gold and cash each make up around 7% of the portfolio. A recent move has been to increase exposure to Europe against a backdrop of further US -led global quantitative easing.
Over five years to the end of October the fund has returned 16.4% compared to 15.3% by the FTSE World index.
Graham French has been reducing the fund's exposure to commodity stocks, bringing it down below 30%. The overall strategy has been a long-term outperformer based on investing in companies that service the needs of consumers in emerging markets. Although part of the portfolio is in defensive consumer facing stocks, the high commodity exposure has weighed on recent returns, but we still back French as one of the best long term fund managers around.
Over the five years to the end of October, the fund has returned 14.5% compared to 25.6% by the fund's customised M&G Global Basic Composite benchmark.
Bruce Stout has long been concerned about the market recovery running out of steam and has steered his fund towards defensive blue chip companies with a large allocation to Asia, Latin America and other emerging markets. He is currently in capital preservation mode. The trust has been trading at a premium for a long while and shares are being issued to try and manage this.
Over five years to the end of October the trust has returned 78.7% compared to the FTSE World return of 15.3% while NAV is up 62.5%. The trust is currently trading on a 6.4% premium.
Market volatility has at times seen the £1.9 billion trust swing into negative territory, providing compelling opportunities for long term investors. The trust’s former lead manager Micky Breuer-Weil stepped down in September but the team continues to invest with a cautious mind set against the uncertain macro backdrop. The trust also offers diversification as alongside investments in equities with strong growth potential, there is also exposure to areas including hedge funds, frontier markets, private equity and property.
Although longer term gains remain strong, over five years to the end of October the trust has returned 2.4%, lagging the 15.3% return of the FTSE World index. Over five years to the end of August, NAV is up 9.8% and the trust is currently trading on a 6.2% discount.