Duncan Blyth, investment research director, Tcam
■ Schroder Asia Pacific
This fund was launched in 1995 and manager Matthew Dobbs has been at Schroders for more than 35 years. Mr Dobbs is based in London but has access to Schroders’ team of analysts and specialists based in the Asia-Pacific region. The vehicle’s long-term track record speaks for itself and the breadth and depth of Schroders’ resources in the region provides comfort that this will continue for years to come.
■ Neptune European Opportunities
Rob Burnett has managed this fund since 2005, having been with Neptune since 2002. He was too early into value stocks, which hit performance from 2014, but the portfolio has recovered following the sector rotation from quality growth to value mid-way in 2016. It continues to be positioned for a European value recovery, which looks compelling from an asset-allocation perspective. Mr Burnett was supported through a difficult period and stuck to his philosophy; factors that are encouraging in a market focused on short-term performance.
■ Man GLG Japan Core Alpha
This strategy is managed by a very experienced team, headed by Stephen Harker. The fund is well positioned for a reversal in the performance of large-cap value stocks, following a prolonged period of outperformance for small- and mid-cap growth names. The hedged share class allows returns to be driven by stock selection and avoids investors being penalised by the effects of a weakening yen.
■ JPM Global Financials
Managed by James Cook and Simon Poncet, this fund invests in global financial services companies. The managers are able to tap into a large and experienced team of almost 20 financials analysts. The portfolio appears well positioned against a backdrop of normalising monetary policy, dissipating regulatory risks, improving capital, and cash being returned to shareholders. Valuations also look significantly more attractive than other sectors of the market.
■ Old Mutual UK Smaller Companies
Manager Daniel Nickols has been running this strategy since 2004, and is also head of the firm’s UK small-cap division. The team has a demonstrable track record of outperforming its peers, and given its long-term presence in the sector, it has unrivalled access to company management. Merger and acquisition activity and the initial public offering market – where scale is an advantage – have historically been good sources of alpha for the team.
Ryan Hughes, head of fund selection, AJ Bell Investments
■ Invesco Perpetual Asian
The pragmatic approach taken by the investment team has delivered remarkably consistent performance over a long period of time. Using a combination of top-down macro and bottom-up stock analysis, the key to the process has been an ability to be flexible and adapt to the changing environment across the Asian region, meaning there is no particular style bias in the approach. This flexibility can see the fund vary its positioning by more than other vehicles at both a country level and a stock and sector level.
■ Hermes Global Emerging Markets
As differentiation increases across emerging markets, a shift towards alpha rather than beta has become the key focus this fund. The stockpicking approach by manager Gary Greenberg is well suited to capitalise on this. As a bottom-up stockpicker, who is entirely comfortable investing away from the index and going off benchmark, Mr Greenberg’s focus towards quality companies in a concentrated structure is very attractive.
■ Polar Capital Global Technology
Led by the experienced Ben Rogoff, who has been a technology investor for 20 years, the team operates a totally unconstrained approach. This allows it to find the best technology ideas in any sector without being constrained by the benchmark. The team is unafraid to look at new technologies early in their life, and this bottom-up approach often has a bias towards smaller, more emergent technology companies where the managers believe they have an edge. While potentially more volatile, this theme on a long-term view remains very interesting.
■ Artemis High Income
This fund capitalises on the high-quality equity and fixed interest resources at Artemis. Led by Alex Ralph, the investment process has no particular style bias and relies on high-quality stock and bond selection to drive returns. Further, with no reference to the benchmark, this means all positions in the portfolio are on merit. The approach has been consistent over a long period, and while taking slightly higher risk than some in the sector, the fund is a strong choice.
■ Jupiter UK Special Situations
The patient, contrarian approach of Ben Whitmore is intuitively attractive in a world of instant gratification, fashions and fads. By taking a long-term approach and, importantly, being prepared to wait to be rewarded, the clear investment philosophy and process is effectively implemented. The contrarian approach results in an unconstrained portfolio that can look very different to the benchmark, meaning investors need to invest for the long term.
Nathan Sweeney, senior investment manager, Architas
■ Hermes Global Emerging Markets
This fund has consistently beaten the benchmark in recent years under the management of the experienced Gary Greenberg since 2011. Although supported by a relatively small team compared with some of its rivals – with just seven members overall – it has proved adept at both country and stock selection. The team’s approach starting with macro-economic themes then drilling down to find quality companies to fill the chosen asset allocation clearly seems to be working.
■ Man GLG Japan Core Alpha
Managed by the highly experienced and stable team at GLG, headed by Stephen Harker, the fund operates a contrarian value style that focuses on simplistic and observable metrics, such as price-to-book and dividend yield. Over the long term the vehicle has delivered strong outperformance versus its peers, and the benchmark, by remaining flexible and rotating the portfolio continually into out-of-favour names and sectors. The portfolio is heavily invested in the largest Topix companies as value becomes more and more concentrated.
■ Charlemagne Magna New Frontiers
Managed by Stefan Böttcher and the team, this fund looks for countries that are going through reform processes, which normally generate excess economic growth. It then searches for companies with strong management teams in a good corporate governance structure. The fund has been well supported by its country and sector calls, with exposure to Argentina and a strong overweight in utilities proving beneficial. The team has also made some good stock selections within both the healthcare and consumer spaces.
■ Royal London Sterling Extra Yield Bond
This strategy is an interesting slant on the more traditional benchmark-oriented corporate bond funds, investing in a broad spectrum of opportunities in investment-grade and sub-investment-grade credit. It often takes advantage of the opaqueness of unrated and less liquid issues. Performance has been strong since its launch, and the vehicle has consistently delivered yields of 7 per cent and above, making it very attractive for income-seeking investors.
■ Old Mutual UK Mid Cap
This is a dynamic, style-agnostic fund targeting both growth and value opportunities across all sectors, although it tends to look quite growth-focused given the nature of the FTSE 250 index. Risk-adjusted returns have been very good over the years. The manager Richard Watts has a particular talent for identifying those rare high-alpha growth opportunities, where a perceived rich valuation may deter his peers. While the strategy is bottom-up, Mr Watts is very adept at assessing the macro climate and shifting his positioning accordingly.
Tony Lawrence, investment manager, Seven Investment Management
■ Hermes Global Emerging Markets
Hermes is a fund house well known for its integration of environmental, social and governance considerations into the investment process. Emerging markets is an area where this is particularly relevant, and Gary Greenberg uses his vast industry experience to deftly weave this into a process that focuses on blending top-down country analysis with thorough bottom-up stock research. The resulting portfolio is more style-agnostic than most in the space while still exhibiting strong quality characteristics.
■ Man GLG Japan Core Alpha
Stephen Harker has been managing this strategy for more than a decade now and has consistently bettered his peers and index alike. You know exactly what you will get with this fund – exposure to large unloved Japanese companies, trading at big discounts to their true value. This is an approach that is typically well-rewarded in Japan and the team is skilled at finding stocks that offer contrarian appeal with great upside potential.
Charlemagne Magna New Frontiers
Charlemagne is an emerging and frontier equity boutique with a disciplined focus on stock selection. Stefan Böttcher and Dominic Bokor-Ingram are seasoned specialists, each with more than 25 years’ experience in niche markets, and both are gifted with the ability to unearth hidden gems. They target quality companies, but only at an attractive price, with fundamental research at the core of their process.
■ Old Mutual UK Mid Cap
The Old Mutual UK mid- and small-cap team is one of the more well-resourced and stable groups on the scene. The fund is overseen by Richard Watts, who expertly translates the team’s idea generation into a portfolio of stocks that consistently adds alpha. Through implementing a combination of top-down analysis with fundamental bottom-up stockpicking, the team is able to target a balanced portfolio capable of delivering impressive risk-adjusted returns.
■ Threadneedle UK Smaller Companies
Threadneedle’s smaller companies team benefits from the deep research provided by its well-resourced UK equity franchise. James Thorne, and the departing Matt Evans, utilise a robust investment process looking for quality businesses that can provide a strong return on capital, yet with a discipline around valuation. Alpha is primarily derived from research-driven stock selection and focuses on innovative, nimble firms that are positioned to take market share, exploit new growth markets and adapt to new market dynamics.
