Deputy news editor and multi-manager correspondent Nick Reeve asks a selection of managers for their favourite Investment Adviser 100 Club members.
David Hambidge, investment director, multi-asset funds, Premier:
Schroder Income
This fund has a strong valuation discipline and will find itself towards the bottom end of the sector from time to time. However, the process has led to strong long term outperformance while the fund has an excellent track record of producing a relatively high and rising income.
Cazenove UK Smaller Companies
This is run by a high quality team and has performed exceptionally well in both absolute terms and relative to UK smaller companies generally. Our only concern is that the fund becomes too big and like so many before it becomes a victim of its own success.
Baillie Gifford European
This is one of our favourite European funds with the team looking to invest in companies that have both a competitive advantage and strong management but without having to pay too much in doing so. Our analysis shows that Europe is a happy hunting ground for active managers and this fund is certainly one of the more successful ones.
Baillie Gifford Corporate Bond
Like many corporate bond funds, this fund struggled a bit in 2008 although you would never guess that looking at the five year numbers today. The portfolio has a longer duration than many of its peers but still pays a relatively attractive monthly income through investing in a combination of investment grade and high yield credit.
Schroder Real Estate Investment Trust
Closed ended property funds have massively outperformed their open ended equivalents over the last few years albeit mostly through share price re-rating rather than growth in the underlying assets. The Schroder trust is highly diversified at both the regional and sector level with generally good quality tenants. Meanwhile it has also benefitted from a number of management initiatives recently resulting in some decent cost savings.
Ian Aylward, head of multi-manager research, Aviva Investors:
Henderson UK Absolute Return
Ben Wallace has been at the helm of this fund for many years both at Henderson and his previous employer Gartmore. More recently, Mr Wallace was joined by Luke Newman. Performance has been consistently good for almost a decade with only a couple of pauses for breath – 2007 and 2012. This is rare for a UK equity long short fund as the duo nimbly trade tactically around positions on recent stock news-flow and developments.
Kames Investment Grade Bond
From a highly respected and successful fixed income team based in Edinburgh, this fund is managed by Stephen Snowden. He has learnt a lot from his investing experience in recent years, especially during his stint at Old Mutual Asset Management, and these combined strengths are reflected in this fund. The fund can hold high yield bonds on occasion to spice up returns.
Schroder Recovery
The co-portfolio managers have a very strong value approach and whilst this has delivered very strongly over the long term, it has especially beneficial this year. In spite of the departure of their boss, Richard Buxton, during the year performance has continued not least due to significant financials exposure.
Cazenove UK Smaller Companies
Managed by Paul Marriage for more than half a decade now, the fund has delivered first quartile returns in one, three and five years by investing in the bottom 10 per cent of the UK market by company size. The P3M approach to investing has helped drive returns.
Ballie Gifford Japan
Managed by Sarah Whitley for more than a decade, she has spent her entire 33 year career with the firm, almost all of which has been on the Japanese desk. Unusually for a Japanese fund, it has a growth bias. However, this has clearly not hampered performance, which has been very consistent.
John Ventre, head of multi-manager, Old Mutual Global Investors:
Schroder Income and Recovery funds
We like both these funds, they are managed by the same two managers Nick Kirrage and Kevin Murphy who use a contrarian approach to seek out sound businesses with long-term value potential they believe is not reflected in the share price. Nick and Kevin mainly focus on businesses and individual companies valuations rather than trying to tome macro themes and market movements.
Polar Capital Global Insurance
One of the funds managed by the team of financials specialists at Polar. The six strong team manage a range of award winning specialist financials funds, with track records dating back to the mid 1990’s. The team’s experience and specialisation gives them a distinct edge in managing specialists products in a sector that has proven to be extremely volatile of late.
M&G Optimal Income
Optimal Income provides a proof statement for the globally unconstrained approach to fixed income that we too champion at Old Mutual Global Investors. In particular, Richard Woolnough’s tactical asset allocation continues to set his strategy apart from many in the sector. His willingness to act decisively on valuation opportunities has proven valuable as has his pragmatism towards interest rate exposure, securing continued performance in a competitive sector.
Investec Local Currency Emerging Market Debt
As early investors in Peter Eerdman’s local currency emerging market debt fund, we have watched him leverage his experience as a former manager research professional in building one of the best teams in the market with expertise in each of the different emerging markets debt disciplines. As a former developed market global bond manager Mr Eerdman also brought a rates and foreign exchange perspective compared to his more credit focussed peers. Both of these distinctions have set Investec apart from the competition which can be seen in the performance generated through time.
Templeton Global Total Return
Michael Hasenstab has an investment philosophy that chimes with our own at Old Mutual Global Investors - a focus on bond markets that offer real (after inflation) yields regardless of their developed or emerging label and a distinctly contrarian flair. These tenets require both real conviction and a depth of research that sadly doesn’t coincide at many managers.
The full list of 100 Club members can be found here.
