Canaccord’s Derrien on his favourite hidden gem funds

Canaccord’s Derrien on his favourite hidden gem funds

Paul Derrien, investment director at wealth manager Canaccord Genuity, has revealed the unloved funds he has been buying.

Mr Derrien said his firm tends not to be able to invest in funds with assets of less than £200m, as they would end up being too big a proportion of his fund.

But he said he views the finding, and placing of client capital into, lesser known funds as being part of the value a wealth manager can offer a client.

He said: “There are often the hidden gems in the funds world - either well performing funds, hidden gems that are overlooked by investors, or up and coming funds that have not yet managed to get on fund pickers radars.”

The first fund mentioned by Mr Derrien is the Sanlam Strategic Bond fund.

This fund has returned 43 per cent over the past five years to 22 November, compared with 24 per cent for the average fund in the IA Sterling Strategic Bond sector in the same time period.

He said: “This remains a smaller fund and part of our fixed income blends. The size of the fund enables it to be very nimble and its return profile is very attractive."

The fund has assets of £160m.

Minesh Patel, chartered financial planner at EA Solutions in London, said he always prefers to get his bond exposure from strategic bond funds, and in the current climate of uncertainty, the flexibility of such funds to invest in different parts of the bond market is key.  

The second fund he nominated is Impax Environmental Markets.

He described this as “an interesting global portfolio of companies in the environmental and resource efficiency markets with a long track of outperformance of a global peer group.”

This fund, which is offshore registered, has returned 111 per cent over the past five years to 22 November, and has assets of £150m.

The next fund he nominated is Edinburgh Worldwide. This is an investment trust run by Baillie Gifford, and is designed to invest in companies in areas such as technology and healthcare that are too early stage for the £6.2bn Scottish Mortgage investment trust, run by the same firm.

Tom Slater, who jointly runs Scottish Mortgage, has previously revealed his only other equity investment is shares in Edinburgh Worldwide.

The trust is managed by Douglas Brodie and John McDougall, and has a market cap of £344m.

The majority of the exposure in the trust is to North American equities.