Six wealth managers reveal their top performing 2014 fund
Tim Cockerill, investment director, Rowan Dartington, Bristol
‘First State Asia Pacific Leaders has been a good fund for us so far. First State has for many years been among the best management groups in this region and 2014 is proving no exception. They have a more conservative investment style than many, with a focus on quality and the long term. While this can mean the fund lags in certain markets, it tends to outperform in weaker ones. Cumulatively, this strategy puts them at the top of the sector longer term.
‘One reason it has had a good year so far is its exposure to India, which is nearly 20% of the fund. Following the recent elections and Narendra Modi becoming prime minister, the stock market has performed well on the expectation of a reformist agenda and clampdown on corruption. This large position in India may seem counterintuitive to a conservative approach but First State has built the portfolio with a strong focus on the bottom-up and India offers plenty of opportunities. Looking towards the next 2/3 years, the fund should continue to build on its strong performance record.’
James Priday, investment director, Prydis Wealth, Exeter
‘The best-performing fund on our buy list year to date is Lazard Global Listed Infrastructure. Global listed infrastructure funds have been strong in recent months, with Lazard (+13%) outperforming its UBS benchmark (+10.8%). Lazard’s Dublin-listed Oeic launched in February 2012 but its strategy has been running since September 2006. Since launch, the Lazard Oeic is up by 60.8% and has significantly outperformed First State Global Listed Infrastructure (+28.4%), its key competitor, and their shared UBS benchmark (+31.8%).
‘Both funds are on our buy list; we are holding on to the First State fund while favouring the recently added Lazard fund for new investment. The Lazard fund is run on a team basis, with London-based Bertrand Cliquet having three colleagues in Sydney and two in New York. The team is very experienced, with an average of 17 years of industry experience and 10 years of tenure at Lazard.
‘The fund’s preferred infrastructure philosophy and process are coherent, well explained and easy to understand. We like the fund’s total return focus and feel it is likely to be less volatile and have a lower maximum drawdown than the First State fund.’
Jonathan Lau, investment analyst, Anderson Strathern Asset Management, Edinburgh
‘We began investing in the Investec Asia Ex Japan fund towards the end of January. Since then it has become a significant outperformer, with a 14% return.
‘When Ben Bernanke announced in May 2013 the US Fed would phase out quantitative easing, global investors panicked. After the widespread sell-off, investors became wary of a potential slowdown in emerging markets, current account deficits and investor outflows. Downside risk remained a key concern for us in 2014.
‘The Investec fund allowed us to restructure our Asian and emerging market exposures, and execute our asset allocation strategy more cleanly. We were looking for a fund that demonstrated resilience to normalising US monetary policy but also expressed our constructive view on China and the changes occurring in the country. When we began implementing our switches we felt the breadth and boldness of reforms announced at the Third Plenum were still underappreciated by the market. Though there are more China-concentrated collectives out there, the fund manager’s blended approach seemed most appropriate, together with his bottom-up stockpicking.’
David Appleton, investment director, Cornelian Asset Managers, Edinburgh
‘Findlay Park Latin American has been one of our best-performing funds year to date, up by around 10% in sterling terms. After a period of underperformance in recent years, Latin America stands out within emerging markets as a region where high quality companies are available at reasonable valuations both in absolute terms and relative to developed market peers.
‘The Findlay Park strategy offers investors access to a focused portfolio of leading private sector growth companies that have strong balance sheets and high returns on invested capital, and can generate strong cashflow and compound double-digit growth in earnings. While the economic and political backdrop across the region is mixed, there is a broad range of underpenetrated industries in the early stages of development, such as healthcare and financial services.
‘We hold the team at Findlay Park in high regard and believe its disciplined approach should lead to superior risk-adjusted returns over time in a volatile part of the world.’
Jonathan Webster-Smith, investment manager, Brooks MacDonald, London
‘Our top-performing fund in 2014 has been the First State Asia Pacific Leaders fund, which has returned 10.41%, resulting in outperformance of 3.18% above its benchmark, the MSCI All Companies Asia Pacific ex Japan.
‘The fund is one of our core holdings within the Far East and emerging market equity sector, and we have been consistently impressed by the ability of lead manager Angus Tulloch to generate above-benchmark returns over a wide range of market conditions while maintaining low beta, which indicates that the fund’s returns are less volatile than that of the wider market.
‘First State has an excellent reputation for investing in Asia and emerging markets, employing a large and experienced research team with a presence in both Europe and the Far East – something we regard as vital when it comes to understanding the nature of the markets in which they invest.’
Simon Holman, Investment Manager, Castlefield, Manchester
'My top performing fund this year is Royal London’s Ethical Bond offering, which is a key component of our ethical portfolio service that I manage. This service invests almost exclusively in ethical funds which limits the choice, but certainly not the performance. The Ethical Bond fund is an ideal pick for our clients: it has delivered consistently good returns against its unconstrained sector peers, offers a healthy 4.5% underlying yield and meets several of the key ethical criteria that clients want. The income component of returns is particularly important for many clients given currently compressed yields while excluding companies involved in the manufacture of armaments or testing cosmetics on animals matches their personal values too.
'Companies unable to demonstrate how they manage increasingly important human rights and environmental risks also fall foul of its investment criteria.
'Mention should also be given to First State’s Asia Pacific Sustainability fund, which has performed strongly this year but which is currently soft-closed. For our clients with existing investments here, this is an excellent fund with an ideal investment philosophy and a track record to match.'