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Citywire Ratings. 13 funds managers on top form
by Nisha Long on Mar 21, 2013 at 10:38
In our latest monthly crunch we highlight 13 managers to successfully navigate the wild market swings over the last three years to deliver impressive risk-adjusted returns.
BlackRock managers Alice Gaskell and Andreas Zoellinger have made their debut with a AAA rating for their performance on the BGF Euro-Markets A4RF GBP fund. Over 30 months they have generated returns of 37.5% on the fund,compared to the Citywire-assigned benchmark, MSCI EMU TR EUR, which has returned 20.8% over the same period.
They invest in small cap company shares which can be more volatile and less liquid than those of larger companies. Geographically more than a third of the fund is invested in France and just under a quarter in Germany. Their top holdings at the end of January were Sanofi S.A. (5.1%) and BASF (4.4%).
With global macroeconomic conditions improving and positive political progress in the eurozone, the duo have increased the risk profile of the fund. At the back end of the year they reduced their stake inInditex and Fresenius which have performed well, and are now seeking opportunities in undervalued companies.
Positions in Volkswagen, Lafarge and PPR have been added to their portfolio and bank exposure has been increased by adding to BNP at the end of last year, which was funded through reducing positions in Deutsche Bank and selling Munich Re.
Marlborough’s Richard Hallet enters with a AA rating for his performance on the UK Leading Companies fund. He co-manages the fund alongside veteran Giles Hargreave who is AAA rated this month.
The managers are not fazed by the current ‘risk on’-driven rally which they believe is not sutainable. However, this has favoured the highly leveraged banks over the less cyclical cash-generative equities where the fund tends to be invested.
The fund is currently well positioned for equity investment in overseas earners, and as the sterling weakens they see getting exposure to the dollar and euro as a key player in their portfolio. This has been reflected in their stock picks BP, Experian and Standard Chartered, which all experienced double digit growth at the start of the year.
Baillie Gifford UK equities manager Gerard Callahan has received his first rating, an AA, for his performance on the UK Equity Alpha A Inc fund. Over 30 months he has generated returns of 45.7%, handsomely outperforming the FTSE 350 TR index which rose by 34.8% over the same period.
He runs a relatively concentrated portfolio of between 30 and 40 stocks, with a low turnover. He tends to avoid short term trends and generally takes a three-and-a-half year view when investing. At the end of February his top two holdings were Rightmove (6.2%) which runs an online real estate portal and BG Group (5.7%), a British multinational oil and gas company. His top sector investments were within consumer services (18.8%) and industrials (16.9%).
Western Asset’s manager Ian Edmonds has gained his first A rating for his performance on the Legg Mason WA Global Multi Strategy Premier fund fund. Over three years he has generated returns of 22.8%, compared to the 15.8% delivered by the Citywire-assigned benchmark, Barclays Global Aggregate TR GBP Hedged.
The fund has a global fixed income remit and a focus on sectors of investment grade and high yield corporate bonds as well as government bonds, asset-backed and mortgage-backed securities. His top holdings at the end of February were German bonds, Bundesobligation Bonds 2.250%, 2015 (8.3%) and a position in the Legg Mason Western Asset IS High Yield fund (5.4%). Geographically his portfolio is mainly invested in issuers based in Germany (27.6%) and in the US (23.6%).
Since the beginning of the year the fund's currency positioning has boosted performance. Edmonds has been helped by exposure to the euro, Mexican peso, Brazilian real and the Indian rupee. This was offset by the fund’s exposures to the South African rand, Japanese yen and pound sterling.
The fund's allocation to high yield corporate bonds has also helped. Over the next few months he is looking to increase the fund's Asian currency exposure alongside exposure to a diversified basket of emerging market currencies.
Financial equities manager Sotiris Boutsis has earned his first rating, an A, for his performance on Fidelity's Global Financial Services fund. Over the past three years, he has generated returns of 27.1%. In comparison his Citywire-assigned benchmark, MSCI ACWI/Financials TR, has generated returns of 23.4% over the same period.
At the end of January his main holdings were UBS AG (3.42%) and Citigroup Inc (3.38%).
Geographically he has more than 35% invested in the United States and around 15% in emerging market Asian regions.
Rohini Rathour has had a steady run on her funds, Sarasin EquiSar UK Thematic and UK Thematic Opportunities and as a result of improved performance she has earned her first Citywire A rating for her risk adjusted performance over the past three years.
The UK Thematic fund has a large exposure to the financial and retail sectors and at the end of January her top holdings were BP (5.9%) and Lloyds Banking Group (5.5%) and her holdings in BHP Billiton, Virgin Media and Prudential continue to do well on the back of pricing power. However, in the last quarter of 2012 her holdings in Vodafone led to underperformance due to concerns of a reduced dividend growth rate, sparked by a lower than expected pay out from Verizon Wireless and weaker than expected cash flow.
Co-managers Jamie Seaton and Adam Steiner have moved up one notch in the ratings, receiving their first AAA. They manage the SVG UK Focus fund and over the past three years have generated returns of 64.0%. Over the same period the FTSE All-Share index has risen 35.5%.
The duo invest in the UK with a multi-cap approach, never having exposure to more than 35 companies. The fund has done well on the back of a strong earnings season and rising corporate activity which has contributed to risk appetite.
The fund has benefited from its high exposure to the media sector. One stock pick in particular, largest holding Daily Mail Group rose 18.1% on the back of a positive interim management statement. Seaton and Steiner say they are confident with the group’s balance sheet position and cash generation and the firm’s management.
Another stock doing well within their portfolio is BBA Aviation which has benefited from improving US sentiment, rising 15%.
Artemis co-managers Stephen Yiu and Tim Steer have received an AA rating for their performance on the Artemis UK Growth fund, moving up from an A. Over three years they have generated strong returns of 51.2%, compared to the 35.5% delivered by the FTSE All-Share.
They have relflected the UK's 'risk-on' appetite by adding more UK-centric companies at the expense of those with a greater overseas exposure.
Yiu and Steer have significant holdings in UK-focused fcompanies such as easyjet, ITV, Sports Direct and Howden Joinery, and are raising exposure to their high conviction plays which they believe will improve their performance in the long run.
However, they have taken a hit from their underweight to banks, and the two believe recent underperformance has been due to asset allocation rather than stock selection. At the end of February their top two holdings were Ashtead group (5.1%), a British industrial equipment rental company, and Rolls-Royce (4.5%).
JP Morgan Asset Management's Michael Barakos has received an A rating for his performance across four funds: JPM UK Equity , UK Strategic Growth, Europe Strategic Growth and Europe Strategic Value. He has received an A rating for his three-year risk adjusted returns on these funds.
The best performing fund on a risk adjusted basis is JPM Europe Strategic Growth, which he has managed since January 2004. His top holdings within the fund at the end of January included Nestle (5.9%) and Roche (4.3%). The fund has a large weighting towards the United Kingdom, which makes up more than a third of the fund.
Boosts to performance came from an underweight position in the energy sector and stock selection within the pharmaceuticals and commercial and professional services. His overweight position in the budget airline operator EasyJet, did well on the back of earning upgrades after it reported a full year profit and doubled its dividend payout.
He also did well to shun UK gas producer BG Group, which many of his peers hold. The company issued a profit warning at the end of October last year and downgraded its production guideline for 2013 on delays in Brazil, Egypt, North America and the North Sea.
Stephen Message has gone up one notch in the ratings, receving an AA rating for his performance on the Old Mutual UK Equity Income fund. He has been consistently rated for the past six months and over this time the fund has benefited as the markets appetite for risk has risen.
On the belief that the life assurance sector is cheap he is overweight in this sector relative to his benchmark. He has a key holding in Prudential which has a focus on Asia and offers very good cash flows and attractive valuations.
Message is underweight food retailers and utilities as he sees competition building up in both sectors which is resulting in tightening margins and unattractive valuations.
In his search for income, he has gone beyond mainstream picks with his holding in Greene King, with has 2,500 pubs across England and Scotland. At the end of February his top holdings were Legal & General Group (4.1%) and Royal Dutch Shell (3.8%).