The forgotten gems that may shine even in rocky markets
Mark Atherton picks out some funds and managers that you may not have considered ? but are worth a punt
Over the past year there has been great turbulence in stock markets around the world, with some well-known funds taking a hammering and a number of high-profile managers departing. It has been a painful but interesting lesson in the importance of diversification.
There are some lesserknown funds that are worth considering as well as some bigger names that will help you to spread your risk. Evenlode Global Income Evenlode has made its name with its Income fund, which Ben Peters co-manages with Hugh Yarrow. The global version, launched three years ago with Peters at the helm, has been less high profile. It has returned 32.5 per cent so far, placing it seventh of the 50 funds in its sector. Among the largest holdings are Unilever, Microsoft and Proctor & Gamble. It has grown to £900 million and is steadily becoming a core option for global equity income investors. Montanaro Better World This is the newest offering from the fund house set up by Charles Montanaro. Some investors might be nervous about putting money into a fund launched less than three years ago, but Montanaro actually started his company three decades ago. He has somehow managed to stay under the radar of many investors, despite strong performance. His latest offering is a global fund looking for medium and small businesses whose products or services are making a positive impact on the world. Holdings include Solar Edge Technologies, which makes smart energy systems, and Idexx Laboratories, a developer of veterinary equipment. Since its launch in April 2018 it has returned 57.5 per cent, compared with 26.8 per cent for the MSCI world index.
Aubrey Global Emerging Markets Opportunities The fund follows a “wealth cycle” approach that seeks to identify each stage of development a country is going through and the sectors that will benefit. At present 54.6 per cent of its portfolio is in China and 33.1 per cent in India. It holds stocks such as Meituan Dianping, a Chinese shopping platform; Sea Ltd, a Singapore-based e-commerce company; and Info Edge India, which runs a range of internet services, including an online job portal and a matrimony website.
Its manager, Andrew Dalrymple, may not be a household name, but he is a seasoned investor with more than 30 years’ experience. He launched this Luxembourgbased fund in 2015 and over three years it has returned 52.9 per cent, putting it third of the 109 funds in its sector.
Jason Hollands from Tilney Group, a wealth manager, said: “With Asia the first to emerge from the Covid-19 pandemic and global growth forecast to rebound in 2021, Dalrymple’s fund looks well positioned to benefit from the recovery. A dialling down of trade war rhetoric in the post- Trump world and a weaker dollar should also improve investor sentiment towards emerging markets in 2021.”
Aberdeen Standard UK Opportunities Equity The fund uses the experience of Abby Glennie, the lead manager, in medium and smaller companies to outperform the UK market outside the FTSE 100. It has done this impressively, and has returned 56.8 per cent over five years, putting it 26th out of 217 funds in the sector. Yet its modest size of £150 million means it remains nimble, which is key for funds investing in smaller companies. Glennie has spent five years in the smaller companies team at Aberdeen Standard, learning from the highly successful Harry Nimmo.
Slater Recovery This fund, managed by Mark Slater, has been running for 17 years, yet it remains relatively small and under the radar at £108 million despite impressive performance. It invests in UK companies in turnaround situations and in those with relatively low valuations compared to their growth potential. It has a strong tilt towards smaller companies. Over five years the fund has returned 84.9 per cent, propelling it into fourth place out of 217 funds in its sector.
If you believe 2021 should be the year when investors in stocks with the greatest recovery potential are rewarded, as well as people invested in the UK, this fund may be of interest.
Baillie Gifford American BG American was the best-performing fund last year, returning 121.8 per cent. It has outperformed both its sector and its benchmark ? the S&P 500 index ? in each of the past four years.
In December it knocked Terry Smith’s Fundsmith Equity fund off the top spot on Interactive Investor‘s monthly bestseller list.
Yet while Smith is a household name, you might struggle to name the four co-managers of the BG fund. The main reason for this is Baillie Gifford’s team approach, which means there is no “star manager” culture at the company.
What the managers ? Gary Robinson, Tom Slater, Kirsty Gibson and Dave Bujnowski ? do successfully is find businesses that can grow exponentially and then wait patiently for that to happen. This is the approach they have adopted with Tesla, the electric car-maker; Zoom, the video-call company; and Shopify, a Canada-based, US-listed e-commerce platform, all of which feature in the fund’s top ten holdings.
