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Citywire ratings: this month's best performing managers

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by Nisha Long, Harry Brooks on Jul 26, 2012 at 00:01

Citywire has crunched the numbers and unearthed the top performing managers during July - five of who have earned a rating for the first time.

Corporate bond manager Tatjana Greil-Castro has gained her first rating, a AA. Her Muzinich Enhanced Yield Short Term Bond fund has returned 12.57% over the past 30 months.

Her high yield exposure has benefitted the fund and overcome negative returns in the European investment grade market. However, her main holdings by issuer as at 31 May were investment grade issuers, with BAA Funding Ltd (2.75%) and EDP Finance BV (2.62%) at the top. Her largest sectors were automotive and auto parts as well as banking.

Her outlook on credit remains positive and she foresees opportunities in high yield corporates as default rates are remaining well below their historical averages in both the US and Europe.

Greil-Castro joined Muzinich in 2005 and rose through the ranks to become managing director and portfolio manager. Prior to this, she worked at Metlife Investments as an associate director. She has a PhD in economic history from the London School of Economics and Politics.

JO Hambro Capital Management’s Ruth Nash gained an A rating for her risk-adjusted performance on the JOHCM Japan Retail fund. She co-manages the fund alongside Scott McGlashan, who is AA rated. Over the past 35 months the fund has generated returns of 12.43%.

At the end May the fund’s more domestically focused medium-sized stocks performed well, helping it beat the Topix index. The managers were impressed by railway companies Keisei and Hankyu Hanshin, which have a strong business structure and good growth unaffected by the turmoil in Europe and the US. The main detractors to fund performance were high beta manufacturing stocks.

The duo has a stringent analytical screen, looking for profitable Japanese companies with net cash on their balance sheets, trading below book value. They have found that whereas in the UK, US and Europe only a handful of companies meet their criteria, over 30% of the companies on the Japanese market do.

Ayumi Kobayashi enters the ratings for the first time with an A. Kobayashi manages the Schroder ISF Japanese Smaller Companies fund, which over the past 35 months has returned 32.56%, well ahead of the Russell/Nomura Small Cap index's 21.77%.

As of 29 June, the fund had 76 holdings, all of which are from the lower 30% by market capitalisation of the Japanese market. The fund's largest holdings were drugstore company Tsuruha Holdings (3.0%); golf course managers Accordia Golf (2.8%); and Hitachi Transport System (2.8%).

Its largest two sectors were retail trade (13.0%) and services (11.7%).

Japanese GDP grew at an annual rate of 4.1% in the first quarter, with the economy starting to recover from last year’s tsunami, and valuations in Japan remain attractive. Kobayashi continues to be overweight stocks which are globally competitive and which are able to grow beyond national borders.

Kobayashi has managed the fund since 1 November 2007.

Baillie Gifford’s Phil Annen moves up one notch in the ratings to receive his first AA rating. He manages the Baillie Gifford Global Bond fund, and in the past three years has posted a return of 31.28%.

Annen first became eligible for the ratings analysis in September 2011, and has held eight A ratings during this time. He invests predominantly in developed market bonds and geographically his main holdings lie in Japan (31.0%) and the US (30.9%). As of 29 June his top two issuer holdings were US Treasury 2.625% 15/11/2020 at 11.1% of the fund and Japan (Govt) 1.8% 20/12/2023 at 9.6%.

Mark Martin has received his first AA rating for his performance on the Neptune UK Mid Cap fund. He has managed the fund since December 2008 and employs a ‘growth at a reasonable price’ investment strategy to look for small and medium-sized companie, focusing on growth, defensive growth, cyclical growth and value stocks.

Despite increased tactical exposure to less defensive areas of the market, he continues to focus on sectors and companies with strong earnings visibility and long-term growth prospects. At the end of May, his top sector investments were in health care (30.0%) and industrials (21.7%). He recently added a position in Daily Mail & General Trust, where he believes poor sentiment and low valuation have provided an opportunity.

Baring’s manager Jonathan Greenhill moves up to an AA rating for his rolling 36-month risk-adjusted performance on the Baring Japan Growth fund. Prior to this he held an A rating for a consecutive seven months. Over the past three years he has generated a return of 20.75% on the fund, outperforming the Topix index, which returned 11.95% over the same period.

Recent positive performers in his portfolio were railway operator East Japan Railway, utility company Tokyo Gas and website operator Rakuten. He has raised his holdings in real estate companies and added Mitsubishi Electric, the electronics and electrical equipment manufacturing company, and removed Benesse, a provider of education material, because of expectations of slow growth.

Alliance Trust’s head of Asian equities, Jonathan Bolton, debuts with an A rating for his performance on the Alliance Trust Japan Equity fund and his previous performance on the Premier Alliance Trust Japan Equity fund, which he stopped managing in November 2010 when the fund closed.

He has managed the Alliance Trust Japan Equity fund since launch in October 2010, and his investment process is fundamental and driven by bottom-up stock selection, with an overlay of top down macroeconomic input.

Guy Skinner enters the ratings for the first time with an A rating for his three-year risk-adjusted performance on the SWIP Global Bond Plus fund.

In May, Skinner positioned his portfolio with a short duration in the US and Japan and a long duration in Germany. However, an underweight position in Japanese yen bonds cost the fund as the yen performed strongly against sterling. However, a better performance for the euro bonds helped offset this underperformance. His top holdings in May were dominated by Japanese and USA government bonds.

Cavendish Japanese equities manager Ron Bullivant has regained his A rating after a five-month absence. He manages the Cavendish Japan Retail fund, and over the past 36 months has generated returns of 16.57 %.

A stronger yen and a global flight from equities sent the Japanese equity market sharply lower, with exporters bearing the brunt. Within his portfolio, domestically focused stocks held up better than larger stocks, which suffered from foreign selling of global funds. In spite of cheap valuations, only a handful of stocks within the portfolio delivered positive performance over the month. The best-performing stock was NEC Mobiling, a mobile phone retailer. He added Anritsu, the telecom equipment testing company, which continues to benefit from the roll-out of new 3G phone networks.

In May, his main sector allocations were in industrials (332%) and consumer goods (19.4%), with top holdings in ACOM, the consumer loan company, (2.7%) and Nikkiso (2.3%).

Alex Wright of Fidelity has been eligible for a rating since October 2011 and has consistently held an AAA rating since coming into the ratings analysis. His ratings calculation is based on the time he managed the Fidelity Inst UK Smaller Companies fund, which closed in April 2011, and now the Fidelity UK Smaller Companies fund, which he has managed since February 2011.

Wright looks for companies with growth potential and limited scope for the shares to fall in value. As at 31 May, his main top holdings were Brewin Dolphin Holdings, an investment management and investment banking firm (4.3%), and Paragon Group, a provider of mortgages and personal loans (4.0%). His main sector holdings were consumer discretionary (25.4%) and financials (18.3%).

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  • Alex Wright
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  • Guy Skinner
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  • Jonathan Bolton
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  • Jonathan Greenhill
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  • Mark Martin
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  • Phil Annen
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  • Ayumi Kobayashi
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  • Ruth Nash
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  • Tatjana Greil-Castro
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