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Wealth Manager Top 100 2017: five specialists' top fund picks

Five sector specialists in our Top 100 reveal their hidden gems and top fund picks.  

In this year's Top 100, we highlighted five sector specialists and asked them what their fund picks are.

The specialists are in fixed income, alternatives, ESG, ETF and investment trusts. Here are their top fund picks.

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In this year's Top 100, we highlighted five sector specialists and asked them what their fund picks are.

The specialists are in fixed income, alternatives, ESG, ETF and investment trusts. Here are their top fund picks.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Richard Carter, Quilter Cheviot

Fixed income specialist

Richard Carter’s top pick in fixed income at the moment is the Pimco Global Investment Grade Credit fund (see graph), which he says has a very strong track record and ‘benefits from the huge depth of resources at Pimco’. He adds that it also provides a way of accessing a wider opportunity set than is available in pure UK corporate bond funds.

On a personal note, Carter says that his pet peeve is that his children are growing up ‘way too fast’ and his hair is ‘getting more grey everyday’, adding ‘the two are probably linked’.

An expert in fixed income, particularly the global bond market, Carter joined Quilter Cheviot in 2011 as head of fixed income research, having previously been an analyst and fund manager at Barings and BNY Mellon. As part of his role, he chairs the firm’s fixed income committee and is a member of its asset allocation and collectives committees.

Carter says his buy list has evolved over the past 12 months by adding more passive options, but stressed that the ‘vast bulk’ of the firm’s assets remain in ‘high conviction active fund choices’.

Quilter Cheviot also seeds funds and Carter says he would need to see a demonstrable and reliable track record from the fund manager to seed a fund, and also have confidence and familiarity with the company that is launching it. But he adds that his biggest investment gripe is that several companies launch funds because ‘they think they can gather assets easily even though the investment opportunity has probably already passed’.

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Ahmet Feridun, Stonehage Fleming

Alternatives specialist

Ahmet Feridun, Stonehage Fleming’s director of manager research oversees all aspects of manager selection and monitoring but has a particular emphasis on alternatives research, with four alternative Ucits products on his buy list.

Feridun oversees £350 million of Stonehage Fleming’s £9.9 billion assets under advice, 80% of which is allocated to actively managed unitised funds. The most recent addition to this buy list has been the Vulcan US Value fund, but Feridun says his hidden gem is the Polar Global Insurance fund (see graph), managed by Citywire A-rated Nick Martin.

He joined the firm in 2007, working initially as a generalist investment analyst researching a range of asset classes but predominantly equity managers. Prior to this he worked on Pictet Asset Management’s emerging market equities team. Feridun has an undergraduate degree in politics, philosophy and economics from University of Oxford and is a CFA charterholder.

As a Manchester United fan, Feridun can be confident in his team generally winning matches. In the investment world, however, he dislikes managers who appear overconfident in their ability to time markets and pick stocks. ‘Our research shows even the best active managers only get around 60% of their decisions right,’ he says.

Although happy paying 0.65% on average for active equity funds, Feridun expects rates to fall due to the proliferation of passives. The rise of these products is culminating in what Feridun terms the ‘race to zero’ where managers are feeling pressure to cut fees simply to remain competitive. ‘Having said that, we also expect those active managers that can demonstrate value for money through consistent outperformance to be more resilient in maintaining their fee level,’ he says.

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Andrew Gilbert, Parmenion Capital Partners

ESG specialist

Andrew Gilbert cites Liontrust Sustainable Future UK Growth, run by Peter Michaelis, as his hidden gem fund pick.

Gilbert started his career in the industry straight after university, when he joined Rathbone Greenbank as an investment assistant. A few months later he moved to Parmenion Capital in an analyst role and it was not long before he approached his employers with an idea for an ethical proposition. Less than two years later, the firm launched its socially responsible and ethical portfolio range.

Now aged just 27, Gilbert has been an investment manager at the firm since 2014. He also chairs the ethical oversight committee and has co-management responsibilities of £2.6 billion of assets. Together with his investment team, they determine which funds they will select through monthly reviews of three investment committees: investment oversight, ethical oversight, and investment risk.

Every year since 2014, Parmenion’s ethical assets under management have doubled, rising from £21.7 million to £55.3 million in 2015, then on to £110.7 million as of August 2016.

On the whole, the firm’s buy list has nearly 250 positions, reviewed on a monthly basis using an extensive quantitative screening process, as well as ongoing manager meetings throughout the year. Some 55% of the buy list features passively-managed funds and another 38% is in active ones. Gilbert says Parmenion’s biggest fund provider is Vanguard, with Miton being the boutique it allocates most to.

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Lynn Hutchinson, Charles Stanley

ETF specialist

Lynn Hutchinson cites ETF Securities’ Robotics & Automation ETF, which launched in 2014, as her best investment call this year (see graph), with a US financials sector ETF, the latest addition to the buy list.

When selecting a passive vehicle, she says that ensuring it has an ‘appropriate index and a good number of market makers involved in the product to keep trading spreads narrow’ is essential, adding that the product being from ‘a well-known provider always helps when being involved in seeding the launch’.

A senior analyst focusing on passive investments, Hutchinson started out at Cantrade, which subsequently became Sarasin Chiswell, in 1992, before moving to Evercore Pan Asset in 2006.

She says that back in those days when the exchanged traded fund (ETF) market in Europe was small, the firm was involved in a number of new product launches.

Pan Asset was acquired by Charles Stanley in 2013, where Hutchinson now oversees the firm’s passive investment buy list.

The ETF market has developed considerably since her early days, which is underlined by some of the more specialist products that Hutchinson has been adding to the company’s ETF buy list. Around 15% of Charles Stanley’s £24 billion of assets under management is held in passive strategies.

In terms of pricing points around ETFs, Hutchinson says: ‘I do feel the passive market is good value for money in the majority of products.’

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James Burns, Smith & Williamson

Investment trust specialist

A partner at Smith & Williamson, James Burns' top pick is the City Financial Absolute Equity fund, managed by David Crawford, which has returned 31.4% over three years to the end of July, compared to the sector average of 11.9% (see graph). Burns says the fund had a ‘rocky performance’ last year but has bounced back ‘pretty strongly’ and also has a good historical performance.

He adds that it seems to be able to ‘make money in different market conditions, which in the current climate could be invaluable’.

Burns joined the firm a year after graduating from the University of St. Andrews in 1998 with a master’s in management. He started working on the investment trust desk in 2001, and now co-heads the firm’s managed portfolio service and leads the multi manager team, responsible for managing £350 million of client assets. He also sits on S&W’s asset allocation policy committee.

He says his best investment call this year has been a couple of special situation discounts plays in the investment trust sector that have both subsequently been taken over. Burns also says that automation and artificial intelligence is increasingly becoming part of his investment process, but the trend of environmental, social and governance (ESG) criteria is not currently part of his thinking, when it comes to investments.

Burns is a member of the Chartered Institute for Securities and Investment (CISI), and outside of fund management lists golf, tennis, rugby, football and theatre among his interests, as well as hockey, a sport in which he represented Scotland between 1996 and 2003.

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