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Citywire Ratings: 10 fund managers on top form
After our latest number crunch we highlight 10 fund managers across a wide range of sectors, who are delivering strong performance.
To gain an A, AA or AAA Citywire rating fund managers must invest their investors' money more effectively than their rivals over a three-year period. They don't have to deliver the highest returns, but they do need to provide a better 'risk-adjusted' return. That means deliver more return for each bit of risk they take.
In the following pages we highlight a fund managers whose record on one fund or more has earned them a Citywire rating in this month's update.
Our researchers use these exclusive manager ratings as a starting point for their fund recommendations in Citywire Selection.
Jacob de Tusch-Lec
Artemis’s global equities manager Jacob de Tusch-Lec receives his first A rating for his 30-month risk-adjusted performance to the end of January on the Artemis Global Income fund. Over this period he has generated returns of 42.29% on the fund, outstripping the 32.03% rise in his MSCI World TR GBP benchmark.
The fund has a substantial holding in European companies and a large number in unloved domestic companies in the southern Europe periphery. This represents a real contrarian approach to his peers, who generally targeted safer companies in core Europe. While he is not bullish on a peripheral economic recovery, he believes there is plenty of value to be found on the stock level. Over the past few months he has focused on cheap stocks with high dividends and a great potential for dividend growth.
In the latter part of 2012 this focus on deep-value stocks outperformed the defensive growth sector on the back of the risk rally. de Tusch-Lec does not believe in investing in banks and cyclicals, and recently the fund has made good money in EdP, a Portuguese utility company, which is deleveraging its balance sheet at a fast rate and has a yield at 8%. He also holds the Italian toll-operator, Atlantia, which is up 50% in the past six months alone.
MFS International bond manager Erik Weisman earns his first A rating this month for his three-year risk-adjusted performance on the MFS Meridian Funds Global Bond A1 GBP fund. He manages the fund alongside Matt Ryan and Ward Brown. The vehicle has an investment focus on government and sovereign-related debt instruments of developed and emerging countries. Over the past three years the fund has returned 16.76% versus a 13.3% rise in the Citigroup WGBI TR GBP benchmark.
The managers have a core investment discipline focussing on country and currency selection and at the end of January the top holdings of the fund were United States Treasury Note 4.125 May 15 15 and the United Stated Treasury Note/Bond 3.500 MAY 15 20.
More than half (54%) of the $44.1 million fund was invested in emerging market debt and 30% invested in non-US sovereign debt at the end of January. The total number of holdings stood at 197.
Mikhail Zverev has had a strong run on his funds, Standard Life Inv Glo Equity Unconstrained Ret Acc and the Standard Life SICAV Global Equities A GBP, which have helped him earn his first Citywire A rating. Both funds have a global remit, on which he uses a high-conviction, bottom-up approach to identify stocks where he believes the consensus opinion is wrong.
For his Standard Life Inv Glo Equity Unconstrained fund he sees strong potential in oil and gas and in recent quarters he has focused on growth in liquefied natural gas volumes in the Asia- Pacific region. He has recently upped his exposure to Santos, which is Australia’s largest onshore oil and gas producer, and believes the company is well placed to exploit the shift in pricing dynamics in Australia. The huge liquefied natural gas export industry is likely to have a positive impact on the domestic market which in turn should benefit the stock greatly, according to Zverev.
Threadneedle manager Ann Steele gains her first A rating for her performance on the Threadneedle Pan European Inst Acc GBP fund. Over this period she has generated returns of 32.29%, outperforming the FTSE World Europe TR GBP index, which rose by 24.94% over the same period.
A minimum of 75% of the fund's assets are invested within the European Economic Area (excluding Liechtenstein). At the end of January her top holdings comprised of BNP Paribas S.A. (3.7%) and Nestle S.A. (3.7%) and the largest sector weights were within financials (23.8%) and consumer goods (21.4%).
First State’s Alistair Thompson receives his first Citywire rating, an A. He co-manages the Skandia Pacific Equity S GBP fund alongside veteran Angus Tulloch who is AA rated this month. Over the past three years the fund has risen by 35.9% versus the 28.5% gain in the FTSE AW Asia Pacific ex Japan TR GBP index.
The duo use a blend of growth and value stocks of companies across all capitalisations based on a bottom-up stock selection approach.
At the end of December their main holdings were Hong Kong’s largest developers of residential, office, retail, industrial and hotel properties, Cheung Kong Holdings Limited (5.8%), and Samsung Electronics Co Ltd (5.76%), which is headquartered in South Korea.
They had major exposure to financials, which made up 31.7% of the fund at the end of December, with consumer staples following with a 12.8% weighting.
Dean Newman regains his A rating after a hiatus of 68 months. His rating is based on his three-year risk-adjusted performance on the Invesco Perpetual Latin American Acc and the Invesco Perpetual Emerging Countries Acc fund. At the end of December the latter’s top holdings were Samsung Electronics (5.66%) and TSMC (3.74%), and the main countries invested in Korea (14.62%), Brazil (12.84%) and China (12.17%).
Newman finds the most attractive long-term investment opportunities in domestic-oriented sectors. He has overweight position in retailers, tobacco and healthcare companies, which gives him access to consumer themes.
At the end of 2012 he initiated a position in trade exhibitions and conference organiser ITE, which predominantly operates in emerging countries.
Looking at investment themes for 2013, he has a strong bias towards companies and real estate which he sees as becoming strong areas of growth for the year ahead on the basis more homes will need to be built in the regions to cater for a growing urban workforce.
Paola Binns (First AAA)
Paola Binns moves up one notch in the ratings to receive her first AAA rating. She manages the Royal London Sterling Credit Z fund and over the past three years has generated returns of 32.4%%. In comparison the index BofA Merrill Lynch Sterling Corporate Bond TR has risen by 29.76% over the same period.
In December her holdings within the financials sector performed well and were less influenced by the rise in gilt yields. At the end of December her weighting in the sector was 21.8% and 26.4% within the latter. She is bullish on the potential growth in corporate bonds and relatively attractive pricing of corporate bonds and the appeal of income to investors support the possible strong returns in this asset class.
Her top holdings were Finance for Residence Soc Housing 8.369% 05/10/58 (1.2%) and Abbey National Treasury 5.75% 02/03/2026 (0.9%).
She highlights new issues have been generally attractively priced and found strong support from investors.
Lee King Fuei (First AAA)
Lee King Fuei, manager of the Schroder Institutional Pacific I Inc and the Schroder ISF Asian Equity Yield GBP A Dis funds has moved up one notch in the ratings and is now AAA rated, his first. He has handsome returns of 55.06% and 61.29% respectively over the past three years.
Fuei has managed the Schroder ISF Asian Equity Yield fund since its inception in June 2004. The GBP share class of the fund, Schroder ISF Asian Equity Yield GBP A Dis, was launched in Feb 2006 and it is this share class we track for the UK ratings analysis. His top holdings within the fund at the end of December included Jardine Strategic Holdings Limited (4.01%) and Jardine Matheson Holdings Ltd (3.45%).
The fund has a large weighting in financials with around 38% of the fund invested in the sector. Main country weightings were in include Hong Kong (24.9%), Australia (23.6%) and Singapore (11.9%) and invest in Asian companies which offer attractive yields and dividend payments which are sustainable as a result.
He typically underweights those sectors which are seen as low yielding such as materials, energy and technology, which leads to a bias towards higher yielding sectors such as utilities and telecoms. This strategy is paying off and there is strong downside protection in the fund, however, this is at the cost of upside potential.
A manager returning to excellent reform is Aberdeen’s Devan Kaloo who re-gains his AAA rating after a long hiatus. His rating is attributed to the analysis of four funds: Aberdeen Global - Emerging Mkts Smaller Co D2 GBP, Aberdeen Emerging Markets A Acc, Aberdeen Global - Emerging Mkts Equity D2 GBP and the Aberdeen European Frontiers A Acc fund.
The largest fund by assets under management (AUM) is the Aberdeen Emerging Markets fund with financials making up to a third of the £3.7 billion fund. He feels the emerging economies are becoming less reliant on exports and are moving towards being domestically driven and as a result has a large proportion of his fund invested in financials and consumer staple sectors which give him access to this sentiment.
No significant changes were made to his portfolio at the end of 2012 and his top holdings comprised Samsung Electronics (4.4%) and China Mobile (3.9%) and geographically his main investments were within Brazil (16.4%) and China/Hong Kong (15.6%).
Emerging markets still remain good value despite being 40% lower than their peak in October 2007. This sector of the market has rebounded and the long term outlook is positive which should place his portfolio well for growth.
A large portion of the portfolio, nearly 70% is invested in gold mining and 23% in precious metals and minerals. In December the portfolio was boosted by the mining sector with the largest developing gold project in Brazil, Belo Sun Mining Corp, benefiting from improved resource estimates for its Volta Grande project. Another stock performing well was Pilot Gold Inc, which had its share price boosted at the end of the month by news that positive assay results showing strong gold mineralisation at its TV Tower project in Turkey.
The pair's top holdings at the end of December comprised the Central Fund of Canada (5.6%) and Goldcorp (3.9%), and geographically Canada (75%) and the UK (7.5%) were the biggest contributors.
They believe gold prices are going to benefit from the continued devaluation and expansion of the global monetary asset base.
More about this:
Look up the funds
- Artemis Global Income Inst Acc
- MFS Meridian Funds Global Bond A1 GBP
- Standard Life Inv Glo Equity Unconstrained Ret Acc
- Standard Life SICAV Global Equities A GBP
- Threadneedle Pan European Inst Acc GBP
- Skandia Pacific Equity S GBP
- Smith & Williamson Global Gold & Resources Inc
- Invesco Perpetual Latin American Acc
- Invesco Perpetual Emerging Countries Acc
- Royal London Sterling Credit Z
- Schroder ISF Asian Equity Yield GBP A Dis
- Aberdeen Global - Emerging Mkts Smaller Co D2 GBP
- Aberdeen Global - Emerging Mkts Equity D2 GBP
- Aberdeen European Frontiers A Acc
Look up the fund managers
- Jacob de Tusch-Lec
- Erik Weisman
- Mikhail Zverev
- Ann Steele
- Alistair Thompson
- Ani Markova
- Dean Newman
- Paola Binns
- Lee King Fuei
- Devan Kaloo